While we can’t predict the future exactly we can approximate the future. Take price action for example. Price is either: 

1. Trending and volatile.

2. Trending and quiet.

3. Range-bound and volatile.

4. Range-bound and quiet. 

A complete trade plan would include different strategies that are in harmony with each of these market conditions. With that, you can align your working strategy with the current market conditions.

Knowing the present condition is easy, the challenge becomes which condition is next and when will it change? 

Technical indicators are helpful. Yes, most are lagging and we’re always looking for leading information but used skillfully indicators can help build your case for timing the change in market conditions. 

Bollinger Bands are a fabulous indicator for this purpose. They clearly display trends and volatility, the key data points to consider. 

In reading his book, Bollinger on Bollinger Bands, I found a pearl of trading wisdom that stuck with me, and I u...

Tuesday’s results: No trades suggested.

Today’s Best S&P Futures Turning Points: Buy 6023.75 stop 6018.00. Short 6134.25 stop 6138.50. 

The World Index: (+100/-100) remains at +29 with sentiment mixed but leaning Bullish on rising volatility. 

Catalysts: Jobless Claims @ 8:30. 

Quick Tip: Volume Leads Price

For as complex and chaotic as the markets can be, price chart traders only have 3 variables to analyze. Price, volume, and time. Most technical traders agree that volume leads price. 

Price moving up with volume increasing is very bullish. It’s hard evidence there is plenty of buying interest. Conversely, price moving up with decreasing volume is not as bullish. The buying interest is waning. 

Price moving down with volume increasing is very bearish. The selling interest is strong. Conversely, price moving down with decreasing volume is not as bearish. The sellers are weakening. 

How can you use this data? For tuning your entries and exits. 

If you’re a breakout trader and ...

Yesterday’s results: No trades suggested.

Today’s Best S&P Futures Turning Points: Buy 5909.50 stop 5904.75. Short 6134.25 stop 6138.50.  

The World Index: (+100/-100) plummets from +36 to -50 with most major world markets Bearish on rising volatility. 

Catalysts: GDP, Jobless Claims & Philly Fed MFG Index @ 8:30. Existing Home Sales @ 10:00. Kansas City Fed MFG Index @ 11:00. 

Quick Tip: Lead or Lag?

The never-ending challenge in trading is forecasting future price direction using lagging information from technical indicators. Better than nothing but you can do even better. 

Significant research has proven that there are two Leading Indicators of price that are not on the chart. Insider buying and Unusual Options Activity. 

Combining the two is the perfect addition to your stock/options trading plan. Learn how in our free training session. Click here.

Trade fearlessly,

Mike Siewruk

 P.S. Share in the wealth! Pass this blog along to your trading buddies. 

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 remaining. 

I recall listening to a trading instructor years ago explain Support and Resistance. He...

Yesterday’s results: No trades triggered. The suggestions stay on the chart. 

Today’s Best S&P Futures Turning Points: Buy 5936.25 stop 5931.25. Short 5932.00 stop 5937.00 if price retraces back from below. 

The World Index: (+100/-100) plummets from +50 to -50 with all major world markets, except Tokyo, Bearish. 

Catalysts: UofM Consumer Sentiment & Inflation Expectations @ 10:00. Fed’s Bowman @ 11:00, Musalem @ 14:30. 

Quick Tip: Parabolic Moves 

Price generally moves in impulses and corrections in both directions. Three steps forward, one back. The trend continues until price moves sideways in a range. Eventually a new trend starts. Look at plenty of charts and notice this repetitive pattern. 

Sometimes the trend portion of the pattern doesn’t move in impulses and corrections. It’s a smooth series of vertical candles, a parabolic move. Look at the S&P daily chart right now, it’s up 250 points, 4.5% in three days. 

Seemingly “overbought” conditions can persist so fighting this...

Yesterday’s results: No trades suggested. 

Today’s Best S&P Futures Turning Points: Buy 5936.25 stop 5931.25. Short 5932.00 stop 5937.00 if price retraces back from below (filtered out during FOMC volatility). 

The World Index: (+100/-100) eases up from +36 to +50 with most major world markets Bullish. J

Catalysts: Jobless Claims & Preliminary NFP @ 8:30. Wholesale Inventories @ 10:00. FOMC Statement @ 14:00, Press Conference @ 14:30. 

Quick Tip: Confirming Trend

If you trade a trend strategy you know that the biggest challenge is filtering out the whipsaw, range-bound conditions. Arguably the king of using Wilders’s RSI indicator for trend identification was the late Andrew Cardwell. 

His quote applies to all trading but especially for trend trades: “You do not have to make a lot of trades you just need to make a few good trades.”

Cardwell introduced the concept of “Range Shift” using RSI to determine bullish versus bearish conditions. Basically, RSI ranges from 40 to 80 during...

Yesterday’s results: Buying 5781.50 picked the bottom of the session and ran for 26.75 points just before the close. 

Today’s Best S&P Futures Turning Points: No high-probability levels today. 

The World Index: (+100/-100) dips from +86 to +57 with all major world markets Bullish except the S&P futures. 

Catalysts: PCE Price Index @ 8:30. UofM Consumer Sentiment (revised) @ 10:00. Fed’s Bowman @ 13:15. 

Quick Tip: Trailing Stops

The technique of adjusting your stop loss so it follows or “trails” price while moving in your direction is attractive. There are several ways to place a trailing stop. The first decision you must make is whether you want your platform to automatically adjust it or you to manually adjust it. 

For automatic trailing stops any decent trading platform will allow you to enter the trailing stop by points, dollars or percentage. If your initial stop was 4 points away, let that be the trailing stop. Simple, but that doesn’t adjust for volatility changes. 

If yo...

Today’s Best S&P Futures Turning Points: This strategy remains on hold.

The World Index: (+100/-100) drops from -86 to -100 with all major world markets very Bearish on massive volatility. 

Catalysts: Final Services PMI @ 9:45. ISM Services PMI @ 10:00. Global equities selloff accelerates. Tokyo enters Bear Market. 

Quick Tip: Down Fast

In its simplest form trading is nothing more than risking money to make money. You need to be a net winner. This will happen if your losses are kept “small” (that’s a relative word) and you have…

1. More winning than losing events and/or 

2. Larger winners than losers. 

Successful traders look for asymmetrical trades. These are trades where the risk is small compared to the potential gains. 

One application for asymmetry is frequently overlooked. Trade direction. Evidence shows that prices tend to fall faster than they rise. Why is this? Fear can be more powerful than greed. 

Look at enough charts, measure the moves, you’ll find it’s true most ...

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Friday’s results: This strategy is on hold... but is improving and likely out of the drawdown soon.

The World Index: (+100/-100) reverses from -36 to +36 with most major world markets Bullish. 

Catalysts: Nothing on the economic front. Election views differ but the market is melting up nicely. Earnings season continues. 

Quick Tip: Open Your Mind

Imagine you’re attending a trading conference. You’re one of hundreds of traders watching the presentations, talking to vendors at their booths, looking for some new edge to add to your plan. 

If you asked everyone you met, “What tools do you use to trade?” Here’s what you’d hear: Price action, chart patterns, fundamentals, supply/demand, moving averages, volume, RSI, MACD, CCI, ATR, Stochastics, Bollinger bands, etc. 

The fact is, other than fundamentals, they are all looking at the same core variables; price, time, and volume, simply displayed differently. 

You’d lik...

Today’s Best S&P Futures Turning Points: Nothing tradeable today.  

Wednesday’s results: This strategy is on hold... but is improving and likely out of the drawdown soon.

The World Index: (+100/-100) jumps from +21 to +50 with all major world markets Bullish. 

Catalysts: Jobless Claims & CPI @ 8:30. Fed’s Bostic @ 11:15 & Musalem @ 13:00. 30-year bond auction @ 13:00. 

Quick Tip: Defining Trend

“The trend is your friend… until the bend in the end.” 

Most traders agree. But not all traders define trends the same way. 

Here’s some examples: 

1. Moving average slope.

2. Higher highs, higher lows (up), lower highs, lower lows (down). 

3. Drawing trendlines based on connecting highs (down) and lows (up). 

4. Higher time interval slope. 

5. Basing price pattern breakouts. 

Take your pick. The question is “Does it really matter which?” 

If you’re consistent with your definition and usage it shouldn’t matter at all. If you’re inconsistent and bouncing from one definition to anoth...