The Daily Market Forecast... Lesson Day

Today’s Lesson: Fresh look at time.

Day traders are generally aware that time of day can matter. Sometimes, it matters a whole lot… like don’t bother trading during certain times.

One of the stats you should be keeping is time of entry. If you trade the Globex (and you should) use the 24-hour “Military” convention for record keeping.

Document several hundred trades (more is better, but you can also back-test to capture this data). Make sure you’re also capturing the gain/loss amount, long/short, and if applicable reversal/breakout.

Here’s an eye-opening trick: If you entered this in a spreadsheet you probably have it sorted by Date and then Time. Re-sort the data ignoring the Date and only by Time. Now, all the trades around certain times of day will be together on the spreadsheet.

Create a chart with Time on the X-axis and Gain/Loss on the Y-axis.

One strategy I trade has reversals and breakouts. Doing this we found some very revealing evidence (sample size for this analysis was >8000 trades). Breakouts generally fail after 12:00 but SOAR from 18:00 to 18:30 (Globex open). Reversals fail during that Globex open and ARE profitable after 12:00.

Of course, these stats are not necessarily transferrable to your strategy. But the exercise of capturing the data and looking at it from a different perspective may pay big for you.

For Tue 211026 (Plenty can change by the open, be aware.)

Globex Review: No trades triggered. Heartbreaker… our buy missed fill by 3 ticks and ran for 18+ points so far. ☹

Day Session Analysis: Sentiment is bullish. Stats are mostly contrarian. Willing to trade either direction under Alt1 stop movement, mindful that a continued melt-up is expected. Tuesday (both sessions combined) garnered 20% of all the gains over the past 5 years in dollars. Reversals and Breakouts are about even. Trading ES/CL/GC using BB Rev with filters (download the new Edge). Looking to establish a credit spread ladder for tomorrow.  

S&P 500 Futures CPL: 4557.25/4560.75. We’re trading ABOVE the CPL (short edge below, long edge above) and ABOVE the equilibrium 4551/4551.25 (open below = short edge, open above = long edge).

The World Index: (+100/-100) RISES from +14 to +29 with Tokyo and the Western world solidly bullish (shorts should outperform longs).

Catalysts: Home Price Index @ 9:00. New Home Sales & Consumer Confidence @ 10:00. All eyes on big tech earnings this week (MSFT/GOOG today). Oil remains high (inflation fear).

Trends: 60 min UP, daily UP starting to range (shorts should outperform longs).

High outside day: Win/Stop% about the same, shorts delivered 20% more profit. Opening +0.40%. $TRIN XMA steady at 1.02. Long term outlook stays long.

Globex: The range of 19.25 (possibly higher by the open) suggests a day session range around 35 points on a FALLING ATR of 42.74. Prior forecast around 40 points, actual 35.25. Trade Well,

Mike Siewruk

P.S. For a free “mini-course” packed full of lessons on HOW to trade the Blog… Watch this video.