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 November 21, 2003
Commentary-
Well, that was a bit of a disappointing day.
I was hoping to get some resolution to the bond and ES conflicts on the daily
charts, but, alas, it was not to be. That brings us one day closer to some
volatility, as the 'clock-spring' winds up tighter. Let's look at updated
versions of the charts on these issues that we have been following. I'll start
with a daily chart of the bond, with the grouping.
The bond has slightly exceeded the top of the
grouping, taking out the highs for the move so far. But it was a very tight
range day, and the close was below the grouping, and near the low of the bar.
Not a convincing 'breakout'. Let's look at the 60-minute chart.
It looks like the uptrend is still in place on this
timeframe. There was a lot of 'action' above multiple highs, and above what
looks like some sideways consolidation. If I had taken a trade against the
daily grouping I would either be stopped out with today's action, or very
close. Although it's looking like it wants to break above the grouping and run,
it isn't showing a lot of strength. To me, this is a 'dead zone' in
here.
Let's follow up on that range trading on the ES that I expected
earlier in the week. I'll show the 60-minute chart.
Boy, I hate to say it, but that's pathetic. I guess it's
not so unusual the day after expiration Friday. Lately most of the action is on
the Thursday before expiration Friday, with Friday frequently being incredibly
dull. This was a good example of the 'dead expiration Friday' syndrome. Let's
look at the daily chart on the ES.
The ES is still hanging around that grouping. It violated the
grouping, and has been continuing to do so, but like the bond, that has
produced almost no reaction of any kind. It's curious that the ES also had a
narrow range day. But it was the inverse of the bond. The bond went through its
grouping to the upside, and then closed below it. The ES went below its
grouping, and then closed above it.
As I stated in the last few reports,
something is going to happen in here, and I expect it to happen soon. It should
bring what us traders so desperately need: volatility. So, be ready. But I have
a caveat. This is a holiday-shortened week, and I generally hate to trade such
weeks, except in the lightest of fashions. The lack of liquidity generated by
many players taking off can really get things moving around, but not in a
manner that can be easy to trade. So, unfortunately, we are cranking this bond
and ES setup up right at a poor time. I hope we don't lose this opportunity to
the holidays.
I'll leave the readers with an interesting setup that I have been
watching for a little while now. Let's look at a daily chart in AMLN.
I put together two very tight
groupings on the daily chart. The real context of this play comes from the
weekly chart (not shown). I am looking at the daily chart as the 'traded
timeframe'. These groupings are a bit further down than what I normally focus
on (as outlined in Kane Trading on:
Advanced Fibonacci Trading Concepts), but I still see these groupings
as possibly significant areas to watch. Let's look at a closer view of these
areas.
I'm going to watch what happens in
here, and look for an entry signal on the lower timeframe. This may provide a
good example for future commentary. Regardless of whether a trade is triggered
for me or not, and if one is triggered whether it works well or barely works,
it will give me material to discuss. There are some other factors, too, that I
haven't discussed that are also guiding me to watch this.
The downside
to this setup is that AMLN has really moved a long ways off its bottom, up over
600% in about two years. Although this thing could keep going, the risk goes up
the further the move has already gone. We'll see. Keep in mind that this is in
no way a trade recommendation. This is a heads up about something that I'm
watching, waiting to see how it behaves around the groupings. It's something
that you might want to follow along with me.
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