This originally appeared as a blog post in Scott Hoffman’s Futures Insight Blog on Wednesday, May 23rd, 2012.
On Monday the stock index futures ended their Chinese water torture selloff and stage a good Taylor Trading Technique Buy day rally. Yesterday was the Sell day in the cycle. That’s what yesterday looked like — the two sided trade of a distribution day.
In the TTT cycle that meant that we should anticipate a Sell Short day for today. Yesterday there were a couple of additional setups as it was an NR4 day and a doji. While this makes sense for a distribution day it also meant that we could anticipate a breakout move today as well.
The breakout setup meant we expected a directional move today rather than an initial feint and reversal to the market’s main trend for the day. The standard reference prices for the breakout move were the previous session high and low — 1326.50 on the upside and 1307.50 down. A breakout trade would be triggered if either the high or low were taken out.
In this morning’s premarket trading there had already been a few moves under and back over yesterday’s low; it was hard to see it as a significant reference price this morning. Shortly after I got into the office it made a session low at 1302.25; we would use that low as a reference price for a continuation of the breakout move down.
The short entry was triggered around 9:15 AM. There was a good morning selloff. In hindsight I should have tightened up stops further or taken profits after the 11:25 double bottom formed at 1294.00 but my hindsight is at least as good as the next guy’s. I kept my stop at break even and ended up scratching the trade.
I marked off three lows this morning — for other LBR followers, was that a “three pushes lower” move this morning?
Try Swing Trader’s Insight for 14 Days
Swing Trader’s Insight Trial - This swing trading resource is designed to help you improve your trading skills and make you aware of trends and new potential opportunities in the commodities markets. Regardless of your current skill level, access to this exclusive swing trading information will enhance your trading experience.
Swing Trader’s Insight includes access to premium web content.
Swing Trader’s Insight includes an email newsletter subscription.
Swing Trader’s Insight trial lasts 14 days.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.