Tuesday, January 09, 2007

Tuesday, January 9th: Morning Comments

9:30 AM - Nice little pop in the NASDAQ and ES. I had added the little comment to my last post when I saw the NQ hold up well under selling. That's a good lesson for the day: when you see the TICK hitting negative values, but the index can't make new price lows, it's generally an early sign that sellers can't move the market any further: that buyers are finding value at those levels. That doesn't necessarily mean that buyers will enter the market in force, but it's usually a good bet that you'll get enough buying to move the index back toward a prior high for a short term trade. Blogger will shut down soon, so I'm signing off. Have a great day! Back with these comments on Monday; regular posts will continue daily.

9:13 AM - Selling strikes me as relatively unconvincing, and I'm looking to see if we stay above yesterday's lows, which should propel us back toward the middle of the trading range and perhaps toward the top. We have only 281 more declining issues than advancers and, unless, we see a downward shift in the TICK and increasing volume hitting bids, I'd look for rangebound trade today. 9: 14 AM I note the NASDAQ is holding up well under selling.

8:49 AM - One of my favorite early trade ideas is to wait for a few minutes and see if the market can break above its overnight high and/or previous day's high. If buying comes in and we can't break above that high, I look to sell on the buying for a move back toward the previous day's average price. My stats work shows a very nice edge to that trade, and it worked out this AM in the ER2. A similar trade applies to markets that can't break their previous day's (or overnight) low. One good trade like that per day with a little size can make your day. It would be worth researching with individual equities as well.

8:08 AM - Good morning. My comments will be abbreviated this AM, as Blogger is scheduled for an outage at 9:45 AM CT. I'll also be on the road working with traders the remainder of this week, so my next morning comments are scheduled for Monday. While on the road, I'll post to TraderFeed on a daily basis. As preparation for today's trade, I've summarized my market thoughts on the Weblog. Also check out the Weblog chart detailing the anatomy of a breakout move. We're trading above yesterday's highs in ES, and I'm closely watching the three-day DAX resistance around 6665 (cash) and the 1816 resistance of the last few days in the NQ futures. I note that, in the overnight session, only the ES has taken out Monday's high. So far, we're not above Monday's high in ER2 or NQ. That's something I'll be watching. If those latter contracts can't get above their previous day's highs, I'll be looking to sell early for a move back toward Monday's average trading price. I'll be following the distribution of the NYSE TICK and the volume trading at bid vs. offer per the aforementioned chart to gauge early strength in those two indices. Next update after the open. Have a great trading day.

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