Here is a link for the Traders’ Expo: NYC Traders’ Expo 

If you are planning on going to the Expo and will be there on the 21st, please let me know. It would be fun to meet with you.  Send an email through the contact page or directly to Helen or me.  I’ll reply with a confirmation.

A Lesson on the UpThrust Trade

UpThrust & Test — Expect Lower Prices

Last night, I posted a 45,000 Tick Chart to highlight the trading range.  I’ve updated that chart with today’s price and Weis Wave action.  I’ve also added a 9,000 Tick Chart.

For the past week, the 1352.75 level painted on February 9th has been the high level containing upside progress.  That level was approached on the 13th and again on the 14th, but repelled both times.  This market action along with the low of 1333.75 made February 9 set the boundaries of the trading range.

Yesterday’s Spring sets up the UpThrust

The spring from yesterday afternoon set the stage for higher prices overnight, which occurred.  Note, however, the volume on the up wave that drove the market up above the 1352.75 high.  I’ve labeled this “A” on the 45 K Tick Chart.  It is lighter than any up wave in the trading range.  A market will be unable to rally higher on such light volume.

The market upthrusts and comes back down well below the trading range upper trend line.  If you were up early enough, you might have gotten a short off near the Globex session highs.  One of the nice things about UTs is that we will sometimes get a second chance.

Short Entry on the Test

That second chance came just after 12:00 noon (EST).  The market revisited the 1352.75 level at this time, and again the wave volume tells the story.  You can see the light up volume on wave B on the 45 K Tick Chart, and which is also identified on the 9 K Tick Chart.  Like the UT, a market will be unable to sustain a rally and push through resistance on such light volume.  This was a classic test of the UT and the spot for a short.

Weis Wave Clarifies UpThrusts

UpThrusts are a favored high odds trade.  The probabilities become clearer with the Weis Wave.  You can learn more about UpThrusts and the Weis Wave at the links below:

UpThrust

Weis Wave

What to Expect Next: Lower Prices

As I mentioned the other night, the choppy action we had been seeing over the past week is indicative of a reaction about to take place.  I will now be looking to see how price deals with the bottom of the trading range (1333.75).  Current conditions indicate it will drive through and head lower.  We shall see.

Free Webinar Tomorrow

Tomorrow, I will be in an interview at TradersTalk with two other traders.  You are invited to join (it’s free).  Here is the link to learn more and register: TradersTalk Webinar.  I look forward to seeing you there.

Is there a high-probability trading setup — that is so good…that you would always take it? 

Well, readers know that market structure trumps trade setups every time, but I will be discussing a couple of trade setups that have high odds in the right context.

This Thursday at 1:30 pm/CT, TradersTalk will ask three successful traders this very question, plus more.

To register (it’s free) and hear their detailed answers, click here now and reserve your spot for TraderTalk. If you’re looking for reliable setups, don’t miss this. We’ll also be asking them questions such as these:

• When you first started trading what assumptions did you make that turned out to be completely wrong?
• As a new trader, how did emotion affect your decisions? How did you overcome that?
• Who (in– or outside of trading) has been the most positive influence in helping you be successful? How?

Panelists:

Dr. Gary Dayton of tradingpsychologyedge.com has been an active trader since 1999. He has traded equi­ties, com­mod­ity futures, the finan­cial index e-mini futures, and options.  His current focus is on the e-mini S&P futures mar­kets, apply­ing the Wyck­off Method of classic  mar­ket analy­sis. In addition, Dr. Day­ton helps traders to master the  men­tal and emo­tional side of trading.

Juan Sarmiento of OptionsVet.com is a veterinary pathologist (DVM, PhD) who began trading stocks in 1991. In 1995, he became a full-time option trader using the Elliott Wave theory. He developed and applies a low risk/high reward options strategy suitable for many market conditions.

Darrell Jones of DTItrader.com began trading stock index futures in 2001. He has traded various markets and multiple time frames and continues to actively trade stocks, bonds, options and stock index futures.

Each week, TraderTalk addresses questions that can make a profound difference in your trading.

Click the link below  to join us Thursday 2/16 at 1:30 pm/CT for those answers. Space is limited so register now to avoid missing this opportunity.

https://tradingpub.omnovia.com/register/59381329260091

Anticipation

First off, I am not making predictions.  Please don’t think that.  As soon as you start trying to predict the market, you will be in deep trouble — at least that is what always happens to me.  We are only anticipating what is likely to occur given the market action.  That is all I try to do.

Wyckoff’s Principles for a Pullback

Second, it is simply an application of the Wyckoff principles.  Wyckoff described what to look for when a market is preparing to pull back.  We covered this in the Wyckoff in the Modern Markets tutorials (here is the link, if you are interested: Wyckoff in the Modern Markets Parts 1 & 2)

Trades

Trading Range

The intraday market provided a few nice opportunities to go short today.  The first around 8:30 AM Eastern Time as the market began to accelerate down after making lower lows and lower highs after it tested yesterday’s highs in the overnight market.

Another opportunity to short appeared after the US open, and again just before the noon hour began as the market tested the US session morning highs.

The market oozed down for several hours, but never developed strong trend day conditions.   As the day wore on we saw shortening of the thrust and some buying come in between 2:30 and 3:30 with a nice spring trade just after 3:30 for a good push into the close.

Bigger Picture

Bigger picture, the market has entered a trading range.  You can see this clearly on the Tick Chart.  We will watch the market action around the edges of the trading range for the next directional play.

Pullback?

The last three days in the S&P futures suggest that we might see a retracement.  The stock market has made no net progress over the past three days, and only minor progress over the past week.   We seem to be at an important level here around the 1350 level (see weekly cash market).

The market can react here, or just go sideways for a few days.  I think a key level is last week’s close.  This is 1340.50 in the March ES contract (Friday’s close).  A close below this would indicate some selling is coming into the market and a push down to at least the 1330 level.  A failure to react here will likely see the market continue it’s persistent rally up to the April high of 1370.58, basis the cash market.

Have a great Valentine’s Day.  Be sure to do something special for those who support you in your trading.  Their support is critical, so let them know how much you appreciate it!

A Nice Short!

The 9,000 Tick Chart highlighted the overbought market at yesterday’s high area.  Less than two points above yesterday’s high was a swing high which served as the resistance target to stop the market.  Chart Reading Mastery students would see all the key elements of this trade setup clearly.  The market falls in a well-behaved manner into the noon hour when we expect a counter trend move.

Weakness in the US Market

Tomorrow is the last day of the month, and so we may see the market try to hold as fund managers look to chalk up a good month for the beginning of the year.  We’ll see if they can do that.  They may not be able to.

During the past week in Deep Practice, we have been discussing the market in detail, the evidence of weakening demand, and the clear signs we would be looking for to see the market begin to pull back.  It started late last week, and the Deep Practice members were well-prepared.

The market has now closed down three days in a row and has broken the narrow uptrend line.   In the previous reactions, the market had gone sideways and not given up much ground.  Not true here.  I am expecting further downside over the next few days.

For tomorrow, watch the trading around today’s high.  If it can’t rally up above this level and hold, the market may start to head lower.    Ultimately, we can see a pullback into the 1283 level and perhaps down to the 1265 level.

Here is a link to learn more:

NYC Traders’ Expo 

You can also click anywhere on the description below and it will take you to the Traders’ Expo site where you can learn more about the event.

If you are planning on going to the Expo and will be there on the 21st, please let me know.  I’d like to meet with you.  Send an email through the contact page or directly to Helen or me.  I’ll reply with a confirmation.

Gary through his in depth approach to the markets has given us bifocal market glasses. Through the upper lens we have learned to structure the market with a conceptual map, while with the lower lens we have been taught to find high quality trades, using the Wyckoff Method of Analysis.Through market technique we have leaned to stack the odds in our favor. We have also learned that we have to continually push ourselves like a musician perfecting his or her craft through deep practice. This course has breathed new excitement into my trading style, and taken the fear out of trading the markets. Thank you Helen and Gary for your hard work.-Joel

“This was a delightful assignment (Chart Reading Mastery) and I have had a wonderful trading day on the EURUSD spot fx doing the assignment while live trading. This is some of the coolest and most encouraging I have ever done. Today I have got the feeling of how powerful your work actually is. With very little stress! I have two times been trying to get into a sell position for a larger down move, but it came up again for break even on both. I don’t mind, because it has given me a great experience with what we learned in previous session. The homework illustration with the trendlines was the actual work behind the first sell position, but as first time and a bit baffled by seeing the result with the work I hesitated on this first one. So the illustrated sell level was not the actual level. The other one went like that. After that I stopped, but see two other opportunities which came later. I did not do the buy’s, because of the recent larger down move from 1.3855. Thank you big time –Lars