Tuesday, May 12, 2009

Qs Pivot Bounces

Another picture perfect pivot support and resistance day. It doesn't get much clearer than this. The Qs were one of the few indices to show green today and closed dead on the VWAP.
These are 5 minute bars shown, although the pivot bounces were clearly evident in all time frames.
Those 3 bearish chops at 11:00, 11:30 and 12:00 were a pretty good indication that bullish traction was going to be hard to come by.
This was not an easy day to trade (at least for me) as there was a distinct divergence of strength between the Qs and the rest of the major markets, including energy and the financials and I'm never quite sure when mean reversion action is going to kick in. Based on a quick lookback at yesterdays 4 ETF post, it looks suspiciously like everything may be headed back to the daily LR30 means. We shall see.
My one "decent trade" was an afternoon short of the Qs based on a bearish convergence of all my lower panel technicals confirmed by a parabolic SELL and a LR30,14,7 downslope that continued right into the close as the Qs plummeted back to the PP pivot. Covered at the close.
FYI, the last indicator on the lower technical panel is a Time Series Forecast 10+2 on top of the Detrend 30. The TSF smooths the detrend signal line and works well as a compliment to the 4,7,14 MAs.
So you're probably going to say, "Hey!, what about that little bullish turn up in the last 15 minutes?" "Wasn't that a signal to cover?"
Good point, and I was tempted to walk away from the trade at 3:50 but, being this close to the lower pivot and with the other indices in virtual freefall, I decided to risk it and ride into the last 20 seconds of the day. Sometimes the attraction of the pivots is the best tell...........

4 comments:

bill said...

bzb,

at 2.54 there was a parabolic buy any reason you ignored that.

thanks
bill

bzbtrader said...

bill,
Yes..several reasons why I ignored the parabolics. #1, there was no confirmation from the mid panel technicals. #2 the 3 LRs stayed in sync downslope and #3 (perhaps most importantly) the NYAD showed little indication that a rally was about to ensue.

ramon said...

Hi Bob, I'm a little confused about your comment that the 3 LR study was in downslope at 2.54 - obviously this was the case at the end of the day, BUT when that 2.54 bar printed the previous 3LR study's would have been mixed i.e 30LR UP and 14/7 LR neutral? do you agree?
Also, I'm assuming you have NYAD on another chart?
Thanks as always - although I might not comment so often I read eagerly everyday!

bzbtrader said...

ramon,
First, you are correct that I watch the NYAD in a separate chart window. As I regard the NYAD as the #1 tell for market forecasting I always want to be monitoring it and its technicals in real time.
Regarding the 3LRs. Yes, the LR30 was upslope, the 14 was level and the 7 was slightly downslope. I never trade against the LR7 slope. I have subsequently added an LR4 to the chart as volatility has picked up recently and this has proven to be a useful tool for further pinpointing reversals (or lack of). Sorry for the confusion ... I should have stated the LRs case better.