Chicagostock Trading

Chicagostock Trading

DAY TRADING TODAY'S DOWN TAPE

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Buying the SP500 today with the market breaching the March 182350 lows to open at 1816 was not an easy task, nor was it impossible. The market provided opportunities intraday for longs to defend. The cash opened at 1816, followed by a squeeze through 1821 to establish a bullish intraday bias which was followed by a shakedown to the reversal window at 181275, offering buyers an opportunity to defend.  This new low and test of reversal window failed to continue lower, seeing a squeeze back through session highs and up to 182850 to test major resistance off the overnight highs of 1832. Failing to get through, the market retraced lower to retest the 181275 session lows which was followed by a small bounce up to 181950. This bounce failed to push through resistance and regain above 1822, seeing sellers take control (read post: Running out of buyers?) and take out the session lows to fall into 180725, squeezing out session longs and luring in late sellers below 181275.  This new low was followed by a bounce up to 181650, once again failing to push through resistance before falling back to 180950 into the close and settling at 181175.

 

With the market settling 15.50 handles from Thursday's close, actively day trading the SP still allowed to collect 32 handles on all LONG trades.  It is always more aggressive to go against the tape, however if risk is defined and reward opportunity is healthy, a day trader can trade any tape long or short.

Below is the AIM feed sent out to Chicagostock members.

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DAY TRADING SP500'S DOUBLE TOP

Both peak highs in 2014 were made on NFP days and only 1 month apart. 

Below are videos on Chicagostock's day trading signals

 

Trading March 7th Non Farm Payroll Number:

 

Trading April 4th Non Farm Payroll Number:

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RUNNING OUT OF BUYERS?

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Since reversing off the year lows of 1732 and through December's high to squeeze shorts, the SP coiled in a sideways range in attempt to find new buyers following that V shaped short squeeze.  The first peak high was made at 188750 in March on Non Farm Payroll numbers.  This was followed by a reversal down to 182350 mid March, before climbing back up to 1877 as the pullback was bought and the 6 month pivots turned into support.  Breakout attempt was seen early April, having to take the FRB chair to say stimulus is still needed to in order to trigger new buying to run the market into new highs setting up a jump ball on the NFP numbers that were released early April. New all time high were made by 5 points up to 189250, again on Non Farm Payroll numbers and was followed by profit taking and sellers pressing the market post NFP release. Both peak highs being made going into the jobs numbers that were both followed by immediate profit taking. The last high is more troublesome as new highs were made only to fail to continue higher, seeing a reversal back down to press and retest the March lows of 182350.  First test of this led to a bounce this week on the FOMC release the 6.5% unemployment target for the fed funds rate would be removed.  The initial reaction was an embracement by the market, seeing a bounce up to 1867 before running out of gas and reversing back down to close below the recent low of 183075 prior to that FOMC release.  Once again the market brushing off stimulus promises and a pull of the 6.5% unemployment rate that suggests rates can remain low longer. 

Going forward, pressure is being put now against the prior low of 182350 made in March to shake out longs and confirm a short term double top.  A weekly close below 1850 is bearish and creates a new range of resistance within 1850-189250.  Looking at the action made in 2014, with the early sell followed by the V shaped recovery that was fueled by shorts being squeezed, the market traded above those prior highs for 2 months in attempt to build a base and attract new buyers following the short squeeze. Failure to build the base and hold above the 2013 highs, suggests enough new buyers are not coming in to sustain the V reversal to expand higher.  If new buyers are not coming in, then the bus may be too full and this gives room to expand lower to target the year lows and confirm a failed breakout with major support at 1700 based off the October low.  Failure to hold the 2014 low of 1732, breaks the series of higher lows the market has enjoyed since the last major low of 1553 in 2013 when investors feared tapering before being squeezed up 300 points.  By taking out the last major low at 1732, this breaks the upward momentum, and gives room to move down into testing levels from 2013 and attempting a gap fill down to 1420.  Support off the year lows is seen down to 1750 for buyers to defend.

VIDEO: Watch Chicagostock's day trading signals on both peak highs.

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CAPITULATION LEVELS

Nasdaq futures are staging the ultimate retest as the market is now 500 points from testing major resistance of where the market failed during the dot com bubble. By taking the low of the last major correction at 281775 (May 2013), using the January high of 362525, and the last recent low of 3412 made February of this year as the market’s attempted to breakdown only to fail, this gives upside fib extension levels of where the market can lead to. Thus far we have seen the market extend 38.2% at 3724, being where and what the market is working on now. Continuation of holding above the early 2014 high of 3635, this gives room to continue the squeeze higher as shorts capitulate. A 50% fib extension is met at 3821, followed by 3858 to complete the range expansion from 3635-3412 up to 3858. MAJOR resistance is met within 3900-4230 as the top level of the fib extension, being a 100% extension of the failed breakdown this year from last year’s move up. The first test of this range, should be sold with both hands forward, as this is the first test of the dot com bubble.

 

 

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Trading Pivots

 

Pivots are used to determine areas of reference for support/resistance.  Pivots are calculated by adding the high, low, and close of the determined time period, and subtracting by 3.  This gives a "mean" of the market from that past data. Pivots themselves are not always enough. By adding ranges to the pivot (above and below), this gives an area of cushion around the pivot.  The tighter the range, the more indecisive the previous data was, giving room for expansion of volatility.  In the above examples, the intraday pivots are derived from the previous day's session.  The three day pivots are derived from the last 3 trading sessions.

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