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 December 8, 2003
Commentary-
I'll start out today's commentary with a
grouping that I was watching for today on VTSS. It played out quite well and I
wanted to show it. I'll then move on to today's intraday action in the indices.
Let me start with a 15-minute chart of VTSS, showing the grouping that I had
put together over the weekend.
I saw a few possible ways to look at this
one, if it triggered. I could play it as a short-term intraday trade, and use a
tight trailing stop method. Or I could play for a longer continuation in the
context of the larger timeframe chart. Given how it laid out on the
60-minute/daily charts (it has a near perfect range trading ABCD right at
Friday's low), I decided this one was going to be a quick intraday play. Let's
see how it played out. I'll also highlight something that should be quite clear
to the reader.
VTSS came off the grouping nicely, and
trended down very smoothly. It then did a very small ABCD correction, and
continued down. This had me looking for this smaller ABCD to perhaps be the BC
leg of a larger ABCD pattern. It turns out that that was exactly what was
happening.
This pointed me to a great area to tighten up my
trailing stops. It also was an area where one might have been looking at
setting up a potential trade area for a long trade. Let me show the 5-minute
chart, highlighting the smaller BC leg ABCD, and the larger ABCD that convinced
me tighten up my stop. The arrow points to the area of the grouping.
VTSS is a really great trading stock for me, when I feel
like playing with a small stock. It does endless patterns and convergences, and
frequently trades quite smoothly.
Let's move on now to the indices. Today was
quite a day from an intraday standpoint. The ES spent half the day boring me to
death in a narrow range. First it headfaked out of the range, then it rolled
almost back down to the bottom of the range, and finally exploded up. The NQ
was a bit more interesting. It was diverging with the ES and the INDU all
morning.
I did see a fairly decent 4-Point Continuation Pattern set up for a
short in the NQ. See if you can spot it on the 3-minute chart. I didn't like
the area too much for a short, so I tested this one on the light side. There
was little follow through on the pattern, as I suspected given the context of
the pattern at the low of the day, but with good money management it was a
small winner. (I mostly played with that one to see how well I could manage
it.)
The NQ then started up, and stalled at a critical area. I had a
grouping on the chart for a potential short trade. Let's look at a 3-minute
chart of the NQ.
This one rolled over nice, and gave
quite a good run. Much better than the first trade, as far as follow through.
This was a trade, though, where I didn't want to overstay my welcome, as I had
been feeling all day that they would take it up at some point. In fact, I was
surprised that they were able to sell it below the low of the day. Once it
approached the area of the 1.13/1.272 external retracements, that was it. They
started to buy it, and never stopped. Let's look at the 3-minute chart of the
NQ.
There were a few real nice trend
continuation signals on this, if you play that way.
Now, in the
larger context, what does today's action tell us? Put together some groupings
on the 60-minute and daily timeframes on the ES and see what pops out at you.
I'll give you a hint: you have to include the pre-market action. It's pretty
cool. Perhaps I will cover this in tomorrow's commentary.
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