Simplify by Trade Aptitude
Yesterday’s results: Buying 5909.50 picked the bottom of the session and ran 66 points to the suggested short at 5975.50, which only offered a 6.25-point scalp. 
Today’s Best S&P Futures Turning Points: Short 6002.25 stop 6007.75. Buy 6007.00 stop 6001.50 if price retraces down from above.
The World Index: (+100/-100) drops from +29 to zero with sentiment mixed and volatility low.
Catalysts: S&P MFG & Services PMI Flash @ 9:45. UofM Consumer Sentiment & Inflation Expectations @ 10:00.
Quick Tip: Simplify
One of our trading teams, the stock/options swing traders, uses a long-only strategy that has extreme asymmetrical results. The risks are very low. The rewards are sometimes parabolic.
While there are dozens of options strategies you could use, why complicate your plan? Simple call option buys work fantastically with these trades because the real edge comes from...
New Paradigm by Trade Aptitude
Yesterday’s results: Buying 5889.75 was only good for a 5-point scalp. The short idea didn’t trigger.
Today’s Best S&P Futures Turning Points: Buy 5909.50 stop 5904.75. Short 5975.50 stop 5981.25.
The World Index: (+100/-100) drops from +29 to zero with sentiment mixed and volatility low.
Catalysts: Jobless Claims & Philly Fed MFG Index @ 8:30. Fed’s Hammack @ 8:45, Goolsbee @ 12:25, Hammack @ 12:30, Barr @ 16:40. Existing Home Sales @ 10:00.
Quick Tip: New Paradigm
What are your beliefs about successful trading? How have you been taught?
Technical analysis? – “All I need is a good indicator or two to be a winner, history repeats itself enough for me.” That’s OK.
Fundamental analysis? – “Indicators are lagging, I want to study and KNOW the asset I’m trading to predict the future with confidence.” That’s OK too.
Chart analysis? ...
Rightness by Trade Aptitude
Yesterday’s results: The suggested short didn’t trigger. No long was suggested.
Today’s Best S&P Futures Turning Points: Buy 5889.75 stop 5885.75. Short 5975.50 stop 5981.25.
The World Index: (+100/-100) rises from -21 to +29 with most major world markets mildly Bullish on low volatility.
Catalysts: Fed’s Barr @ 10:00, Cook @ 11:00 & Bowman @ 12:15. Crude Oil Inventories @ 10:30. NVDA earnings after the close.
Quick Tip: Rightness
We have an innate desire to be right. Being wrong is the equivalent of failure. But in trading this shouldn’t matter. We obviously can’t control the market or perfectly predict the future. The best we can do is decide in advance how much profit or loss we’ll accept.
The late Mark Douglas, author of Trading in the Zone, said "When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment,...
Art in Exits by Trade Aptitude
Yesterday’s results: Buying 5895.50 picked the bottom of the session and ran for 37.50 points before closing the day +25.50. The short idea didn’t trigger.
Today’s Best S&P Futures Turning Points: Short 5975.50 stop 5981.25. No long suggestion today.
The World Index: (+100/-100) drops from -14 to -21 with Asia mildly Bullish and the west firmly Bearish.
Catalysts: Building Permits/Housing Starts @ 8:30. Fed’s Schmid @ 13:10. Ukraine/Russia war escalation.
Quick Tip: Art in Exits
Dozens of different methods of trading can be profitable. If you doubt this statement you need to read any of Jack Schwager’s “Market Wizards” books.
In each book he interviews top traders from around the world. Dozens of them. What you’ll find is that almost every trader has a different take on how to trade. Some use technical indicators successfully. Others focus on algorithms. Still...
Behave Yourself by Trade Aptitude
Yesterday’s results: Buying 5036.25 was only good for a 6-point scalp. The short level didn’t trigger.
Today’s Best S&P Futures Turning Points: Buy 5895.50 stop 5589.75. Short 5975.50 stop 5981.25.
The World Index: (+100/-100) eases from -21 to -14 with all major world markets neutral to Bearish on low volatility.
Catalysts: Fed’s Goolsbee & NAHB Housing Market Index @ 10:00.
Quick Tip: Behave Yourself
Imagine starting in trading without any historical information. No price charts. No patterns to study. No economic information. No annual reports. What would you use to determine if it was time to buy or sell?
Thankfully, we needn’t dwell on that question at all. We have incredible historical information available that we can research for potential edge in our trading. However, the fact is that historical information is not a perfect predictor of the future. We can’t...
Tuning Your Watch List by Trade Aptitude
Yesterday’s results: : No trades triggered.
Today’s Best S&P Futures Turning Points: Buy 5936.25 stop 5931.25. Short 6002.75 stop 6007.75.
The World Index: (+100/-100) drops from -7 to -21 with all major world markets neutral to Bearish on low volatility.
Catalysts: Retail Sales, Empire State MFG Index, Import Prices @ 8:30. Fed’s Collins @ 9:00, Williams @ 13:15. Industrial Production @ 9:15. Business Inventories @ 10:00.
Quick Tip: Tuning Your Watch List
Stock and option traders have a challenge that futures and Forex traders don’t have. How to winnow down your trading candidates from nearly 9000 stocks.
There are some common filters that are easy to implement like price and volume. Picking stocks that are between $10 and $50 reduces the selection to 2200. Add in average volume over 1 million daily and you’re down to 562.
You can keep adding filters to get to a manageable number,...
Second Chances by Trade Aptitude
Yesterday’s results: : Shorting 6032.75 caught the high of the session and ran for 25.50 points before closing the day +19.00.
Today’s Best S&P Futures Turning Points: Buy 6037.50 stop 6034.75 if price retraces down from above. No short candidate today.
The World Index: (+100/-100) dips from zero to -7 with the major world markets diverging, Asia is Bearish, the west is Bullish, range is increasing.
Catalysts: PPI & Jobless Claims @ 8:30. Fed’s Barkin @ 9:00, Powell @ 15:00. Crude Oil inventories @ 10:30.
Quick Tip: Second Chances
Yesterday’s short entry was effective three times. The expected sellers were clearly active. Historically, the first touch works best. Subsequent touches while still tradable, have less probability of success.
Why? Because every order initiated from the sell side reduces the number of contracts available for sale. Eventually there are no big sellers...
Trading in the 5th Dimension by Trade Aptitude
Yesterday’s results: Buying 5996.50 stopped out. Shorting the retracement to 5993.50 offered a 6.75-point scalp.
Today’s Best S&P Futures Turning Points: Short 6032.75 stop 6037.75. Buy 6037.50 stop 6034.75 if price retraces down from above (filtered out during CPI release).
The World Index: (+100/-100) soars from -71 to zero with the major world markets mixed on falling volatility.
Catalysts: CPI @ 8:30. FOMC speakers; Kashkari @ 8:30, Logan @ 9:45, Musalem @ 13:00, Schmid @ 13:30. Federal Budget Balance @ 14:00.
Quick Tip: Trading in the 5th Dimension
You could argue that chart trading is 3-dimensional. You’re analyzing price, volume, and time on a chart.
If you add fundamental analysis to your plan that would be your 4th dimension, and it would very likely improve your performance. Knowing more about the assets, sectors, and economy can only help you.
There is a...
Diversify Re-Defined
Yesterday’s results: No trades triggered.
Today’s Best S&P Futures Turning Points: Buy 5996.50 stop 5992.75. Short 5993.50 stop 5997.25 if price retraces up from below.
The World Index: (+100/-100) plummets from +36 to -71 with all major world markets Bearish on rising volatility.
Catalysts: Fed Speakers today: Waller @ 10:00, Barkin @ 10:15, Kashkari @ 14:00, Harker @ 17:00, Barkin @ 17:30.
Quick Tip: Diversify Re-Defined
One of our teams day-trades in the futures market. There is plenty of focus on the S&P 500 contract. Yesterday it traded in a relatively narrow range (31.75 points) and closed down 8 points from Friday. The other indexes weren’t very different. Ho hum.
Our other team swing trades options. You might think that given the lack of movement in the indexes that the options portfolio would be flat too. It wasn’t. In fact, there were specific options that moved substantially. My...
Windfalls by Trade Aptitude
Yesterday’s results: No trades triggered.
Today’s Best S&P Futures Turning Points: Buy 5996.50 stop 5992.75. Short 5993.50 stop 5997.25 if price retraces up from below.
The World Index: (+100/-100) soars from -50 to +36 with most major world markets Bullish.
Catalysts: Nothing on the economic calendar.
Quick Tip: Windfalls
Not nearly enough, but on occasion your trade becomes a windfall. Not so much in day trading but swing and position trading for sure. Maybe you bought NVDA 2 years ago and held on. Windfall!
Our swing trading team experienced a remarkable windfall trade last week. The strategy we used had to do with Unusual Options Activity. Simply put, these are huge bets on unlikely outcomes. The concept is that anyone who can bet that big must know some non-public information.
Following the chart above you’ll see we uncovered a Smart Money bet on 10/21. $2.1M was bet on this $160...