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 December 12, 2003
Commentary-
Today I'm going to follow up on some of the
trades that I have been covering lately. Let's start out first with the daily
play on the ES. I will use the December '03 contract for this, but remember
that we are now rolled out to the March '04 for actually trading, for that is
now the active contract.
I will use the December here because the older data is
'cleaner' right now, and I built the groupings based on that contract. I am
using the older contract charts here, though, just to demonstrate how the
trades that we have been following are progressing. I'll begin with the daily
chart with our groupings, as well as the regression channel and extra line that
I showed back on December 2.
Recall that this is the trade that 'wiggled
me out' after first bouncing off of the top of the uppermost grouping, leaving
me looking for a re-entry. I mentioned that some traders may have sat that heat
out, but I get very jumpy when the bottom of the grouping gets
penetrated.
I know many pattern traders that have a lot more tolerance for a
little wiggling on the far side of their potential trade areas than I do, and
they are successful with trading that way. Traders have to decide for
themselves how sensitive they should be to 'noise'.
Once this one
got going, it really went. My play was for the thrust move up, which finally
exhausted itself and cued my remaining trailing stops. Many traders might have
seen this as a trade to play on a larger timeframe, and hence they may be
willing to sit through some pullbacks, at least on part of their trade.
Notice the
arrow on the chart. The arrow points to a setup that I pointed out on the
60-minute chart. This could have been viewed as its own trade, or in the
context of an ongoing trade on the daily. It may have been used to manage an
open trade, or as a place to consider adding to an existing trade. Let's look
at how this has progressed on the 60-minute chart. Again, I'll refer to the
December contract.
I used this area as a place to start a new
trade, in the context of the daily chart. If I had been playing the daily in
the context of the weekly chart, I would have been riding this pullback out,
and perhaps adding to the play against this grouping. It just depends on which
timeframe you are choosing as your 'traded timeframe'. If trading this grouping
on the 60-minute timeframe, I would be in the scaling out and trailing stops
phase right now.
Let's move on to see how AMLN is doing.
Just when I thought AMLN was going to take off early and
leave me behind, it rolled over once again. It hasn't set a new low for the
move, but it's getting close. It's still in 'watch mode' for me, but it
shouldn't be long until I know if I'm going to have an opportunity or
not.
And lastly, let's look at that 'double pattern' on the daily VTSS
chart.
It's a little bit hard to see with
all the lines on the chart, but VTSS went right down to that 1.272 external
retracement and bounced up strong. Although I just have two retracements on
this chart instead of a grouping (I left it as an exercise for the reader to
construct their own grouping on this one), it's bouncing near the top end of
where I'm watching.
I got a very good entry signal on this one
with a new entry trigger that I'm using. I am getting ready to offer this as a
new eArticle. It's an entry trigger that I devised specifically for 5-point
pattern trades. This one gave a great signal as soon as the reversal started.
Now this in no way assures me that this trade will work from here. The trigger
merely told me that based on my own personal criteria, and my choice of
potential trade area, the time has come.
Part of this
new entry technique involves making the judgment that the trade has entered the
potential trade area in a manner that is satisfactory to the trader. In this
case, I don't really feel that this one has fully entered the area. I decided
to try this one anyways, since it came off the top of the area. I would rather
stop out and look for a re-entry than miss this one. We'll see what happens,
and I'll update this as it plays out.
Keep a watch out on the 'What's New' page for the
introduction of this new eArticle. I think it will be very beneficial to
5-point pattern traders who are looking for a different way to enter pattern
trades than just 'fading' the entry. I have also looked a bit at using this
with my 4-Point Continuation
Pattern, and it looks like it will work there, too.
I will see
everyone in my next commentary on Monday.
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