S&P futures (ESM15:CME) 3 Day Trend chart
The S&P futures charged higher yesterday after a batch of better than expected economic reports. Greece remains front and center on most traders’ minds but the S&P looks like it’s trying to shake it off. After double bottoming at 2096.00 on the emini, S&P 500 futures (ESM15:CME) moved higher yesterday, but fell short of all the buy stops above 2122.00 up to 2126.00.
The One That Got Away
It’s great to talk about all the winning trades we make. Sometimes it sounds like we are bragging, but not very often do we talk about the trades that followed a tactic that used to work, but did not. It’s very discouraging and it seems to be happening more often. One of the things about being a trader is being honest with yourself, and trying not to repeat past mistakes, but once we notice a working pattern, it’s not very long after that the algo’s have too.
One of my problems is, I often enter a trade early. I have the right idea and direction correct, but I get impatient and end up getting stopped out at the prices I should be buying at. Or just as bad I make the correct trade by buying the lows, watch it go up 3 or 4 handles, get out of half the position only to get stopped out when the ES goes back down for its retest. Then I watch the ES go on to make new highs for the day. When I talk to the PitBull about this, he says “the coders have figured it out.” The previous highs and lows for the day, the week, Globex highs and lows, pivots, moving averages… you name it the algos have coded it. In addition to some bad trade location, the wayward sell program the retests are designed to knock the customer out of his or her position, just before a big move the other way. So, you get part of it but not all of it. Like the computers are letting you play with the bank’s money but even when you’re right, they still try and knock you out. So my question is…is it just me? Or have the algos figured out how retail traders think and place orders? I think they have and when I get knocked out at a low, I know in most cases, the ES will go flying back up.
ALGO KNOCK-OUT
Bottom line, to beat these computers timing is everything. If you catch it right after a 10 or 15 handle sell off, and the selling dries up, making 10 handle winners is not all that hard. Its staying with your plan and hoping the algos don’t knock you out before they rip. I always try and tighten my sell stop up after exiting half the position. In most cases, had I just left my sell stop where it was instead of bringing it up to a break even, my average goes way up, but once I trail that stop it always seems like the algos have to do that last blip down to knock me out. My question; is it just me or has it happened to you too?
Nothing is easy when it comes to trading futures and options, but the one trading rule that can win over, is being more patient. Its not easy to do, but when you are, you get paid a lot more.
In Asia 7 out of 11 markets closed lower, and in Europe 10 out of 12 markets quoted are trading lower this morning. We have another busy economic calendar today; Chain Store Sales, Challenger Job-Cut Report, Jobless Claims, Productivity and Cost, Gallup US Payroll to Population, EIA Natural Gas Report, 3 and 10 Yr-Note Auction, 30 Yr-Bond Announcement, Daniel Tarullo speaks, Treasury STRIPS, Fed Balance Sheet and Money Supply.
Beware of Greeks Bearing Gifts
Our View: As expected the Greek Syriza party officials reject the deal proposals made by creditor institutions. Members of the Syriza party said they cannot accept a deal proposed by the country’s creditors during a meeting between Prime Minister Alexis Tsipras and the head of the European Union’s executive arm. I am sticking with my idea that the Greeks are going to default. I know big firms like JP Morgan are saying to sell the rally in the S&P after a deal is stuck, but I do not think there is not going to be a deal. There is no way the country can pay back the money they borrowed. That said, the news sent the ESM15 all the way down to 2099.75 in Globex. My own feeling is that the Greek news is nothing new, and that over 200,000 ESM15s traded on Globex at 7:00 CT tells me most traders already sold the news. This is not making my call to run the buy stops above 2122, but I knew Greece was going to be the wild card. Our view is, let the ES run some early sell stops and look to buy the weakness.
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- In Asia 7 of 11 markets closed lower: Shanghai Comp. +0.76%, Hang Seng -0.38%, Nikkei +0.07%
- In Europe 10 out of 12 markets are trading lower : DAX -1.28%, FTSE -1.23%, MICEX +0.49% , GD.AT -2.66% at 7:00 am CT
- Fair Value: S&P -1.62, Nasdaq -1.09 , DOW -12.74
- Total Volume: 1.3mil ESM and 5.3k SPM traded
- Economic calendar: Chain Store Sales, Challenger Job-Cut Report, Jobless Claims, Productivity and Cost, Gallup US Payroll to Population, EIA Natural Gas Report, 3 and 10 Yr-Note Auction, 30 Yr-Bond Announcement, Daniel Tarullo speaks, Treasury STRIPS, Fed Balance Sheet and Money Supply.
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