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 December 1, 2003
Commentary-
There's just too much. There's too much going
on for me to even cover a small part of it. Four different times I changed my
plan for today's commentary, as things happened. I'd love to share it all, but
there just isn't the time and space. One of the hardest things I've had to deal
with since I started this column is picking the one or two concepts to cover on
a given day, and do it in a quick, concise manner.
Today I just
have to revisit something from the last commentary, and then we'll go back and
look at our daily groupings on the ES and bond charts. In that last commentary
I discussed how important it was to watch for the obvious things on the chart
as well as the Fibonacci and patterns that you may already be watching. Let's
first review the 13-minute ES chart from that last column.
Now let's look at a chart from today. See any
similarities?
I'll add on a Fibonacci number,
just for fun.
That was just a gift from the
trading gods. I can't state for a fact what happened here, but if I were forced
to bet here's my guess. The 'players' want to accumulate more, and after
watching this sideways chop they decide on a plan. They dump some futures and
it causes a bail out on this morning's longs, and initiates new shorts on the
break down.
They sit waiting with their catcher's mitt, right at the line on
the chart. They start to buy cheap down there, and hence start their
accumulation from this much lower area. I think that this type of thing is done
all the time. The area the ES broke from was ripe to be taken down. There were
just too many longs and too many breakout short traders, just waiting right
there.
Let's move on, and follow up on the daily charts that we've been
looking at. Let's see how the daily bond chart looks with the grouping on
it.
The grouping did, in fact, point to
a great potential trade ahead of time. I can't say if this down move will
continue from here or not, but so far the trader has had in the area of three
full points to work with. Now the trade is in the management phase. I have some
of my very best techniques for this outlined in Kane Trading on: Trailing Stops,
which I think is, perhaps, my best book so far. Before we go to the ES, though,
I must point out one thing. Something on this bond chart is just screaming out.
What is it? Try to figure out what I am talking about. I'll put it on the chart
in tomorrow's column.
Let's see what the daily ES chart looks like
with the grouping.
The groupings on this chart also pointed to a great potential trade
area. The ES is up about 40 points (hard to believe it's that much already)
from the groupings, and at new contract highs. Just like with the bond chart, I
can't say what will happen from here. It's now management time. As I mentioned,
I bailed after the first try at this one. Some traders perhaps had a bit wider
of a stop than I did, and are still in.
I have no problem with a second or even a
third entry, in fact I, personally, think that they are critical to success.
I'd rather take the trade off and simply re-enter, than take a lot of heat.
That's just my style. This potential trade was very 'goofy' in the potential
trade area. I prefer trades that just rocket off of the grouping.
I pointed out
in previous columns how important I felt that area was, and the indecisiveness
really supported that idea. It's not often I see that much 'see-sawing' right
around a grouping of such significance. I think what I'm trying to point out
here is that although the trade was 'slow to start', the significance of the
grouping was still foremost in my mind. Once stopped out of the first trade
with perhaps a small profit, I'm thinking that an uptrend is still likely, and
if one starts, I'm using the strategies from Kane Trading on: Entry Techniques
to get on board. This trend has had plenty of re-entry opportunities.
Tomorrow I'll
try to get to some of the absolutely huge list of things I've seen in the last
few trading days, but, again, if I see something more urgent, I'll have to go
with that.
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