Combining GB with spread trend

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Re: Combining GB with spread trend

Post by pmward » Thu May 21, 2020 11:00 am

pmward wrote:
Wed May 20, 2020 12:43 pm
Also, stop loss moved up again in SLV today, current stop is in the general vicinity of about $15. Guaranteeing more profits. I would like to see us get a pullback/retest of the 200 day SMA and bounce to confirm that as support, that would give me confidence to move my stop up even higher to just below the 200 day SMA. Trailing a stop is a bit more of an art than a science. In a volatile asset like SLV you have to give it some room, as I don't want to get shaken out during normal market volatility.
Today we are going to check back in with SLV. See the quote above from yesterday. I sure did not expect this to happen the next day, lol. These volatile markets move so fast. But if you look we did just this. We went down just below the 200 day SMA, just enough to excite the bears, then the bulls issued them a pie in the face and ripped the price back above the 200 day SMA. Now it is still early in the day so we have to see if this holds of course. On the 15 minute chart though there is a bull flag forming, so it's looking possible we will get another up move. If we close above the 200 day SMA that would give me a lot more confidence. So, as a learning lesson here, when and where would I move my stop loss up? Passing the test does confirm it is support, and there are bulls watching and willing to buy whenever we dip below it. That's a good thing. But, SLV is also a volatile instrument so I do not want to put my stop loss too close to current price. So, what I would do is watch for the next higher high. If/when we get above 16.44 that would confirm a new higher high and higher low. At that time I would move my stop loss up to probably ~1% below the 200 day SMA (once again to account for volatility and another fake out break down like this morning). At that time I would also look at other support areas that would be in the area near the 200 day SMA, as having it below multiple support levels if possible is a good thing.

Also of note, I did add on to my SLV, GDX, and GLD positions this morning as all 3 tested support this morning. I've always been more of a breakout trader than a support bounce trader, I'm trying to expand my horizons a bit with a new technique that is a bit more fitting in the current market environment.

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Re: Combining GB with spread trend

Post by Vil » Mon May 25, 2020 8:41 am

pmward wrote:
Thu May 21, 2020 11:00 am
I'm trying to expand my horizons a bit with a new technique
Having said that ... Master Pm :D , I was having in my (mid-term) TODO to ask you something.. the right time just came ;D So, it might sound you not quite a wise, but I am relying a lot on trailing stop loss orders those days. Rationale behind is the following - once I jump on the train (that's home brewed combination of HA candles, stochastics and MFI and definitely not the grail), I rely a lot on trailing stop losses to exit (as I said - especially those days).. Again, it might sound not really wise to do it all the time, but those days as I am generally lacking the time to contemplate a lot on support/resistance levels (Fibs I am not a fan of), etc. I just let it run ... Normally, for my day trading adventures I start with slightly generous 2 ATR.. then, if the trade gains traction I am decreasing it.. What's your thought on the slack of the trail ? As usual - thanks.
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Re: Combining GB with spread trend

Post by pmward » Mon May 25, 2020 11:17 am

Vil wrote:
Mon May 25, 2020 8:41 am
pmward wrote:
Thu May 21, 2020 11:00 am
I'm trying to expand my horizons a bit with a new technique
Having said that ... Master Pm :D , I was having in my (mid-term) TODO to ask you something.. the right time just came ;D So, it might sound you not quite a wise, but I am relying a lot on trailing stop loss orders those days. Rationale behind is the following - once I jump on the train (that's home brewed combination of HA candles, stochastics and MFI and definitely not the grail), I rely a lot on trailing stop losses to exit (as I said - especially those days).. Again, it might sound not really wise to do it all the time, but those days as I am generally lacking the time to contemplate a lot on support/resistance levels (Fibs I am not a fan of), etc. I just let it run ... Normally, for my day trading adventures I start with slightly generous 2 ATR.. then, if the trade gains traction I am decreasing it.. What's your thought on the slack of the trail ? As usual - thanks.
I'm not a fan of arbitrary percent based trailing stops. I always trail a stop but I always use support levels, moving averages, average true range, etc to help me find the proper level. The timeframe of the trade also helps determine this. For instance, if I'm looking for a big multi-month to multi-year trade I will place my stops based on the weekly chart. If I'm looking for a couple week to couple month trade, I'll place my stops based on the daily chart. If I'm looking for minutes, hours, or days I'll go to different intra-day charts (1 hour, 15 min, and 10 min are my favs). Support and resistance is the most effective technical indicator out there. Large institutions, hedge funds, prop desks, etc make up 90% of the volume out there and they all trade using support and resistance levels. They work because of this. It's not magic, it's just that most of the volume out there uses these levels to trade (remember each timeframe chart has different support/resistance levels too). These support levels include major pivots, fib retracement levels, popular moving average lines, gaps, break up/down candles, trend lines, patterns, etc. So my best advice to you would be to really learn how to read a candle chart first. This is the most important tool I've found. All you really need to trade effectively is a candle chart and the popular moving averages (20, 50, 200 period SMA's). If you buy at support and sell at resistance, while always keeping a stop below a strong resistance level, you will win way more trades than you lose and minimize the damage in your losses. I find the other indicators to be more confirmation than actual trading indicators. I never place a trade based on an indicator, but I do glance at RSI, spread charts, and PPO/Macd for general confirmation/divergence signals as well as for quickly narrowing down a large pool of potential trades down to the strongest or weakest depending if I'm looking long or short respectively.

My favorite technique in the past was buying a breakout of resistance, and placing a stop below. Lately I'm trying to buy support, and once again placing a stop below. In this new strategy it really warrants finding a trade where there are multiple levels of support on multiple timeframes in the same general area. The more reasons for support, the higher the odds it bounces.
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Re: Combining GB with spread trend

Post by Vil » Mon May 25, 2020 11:33 am

pmward wrote:
Mon May 25, 2020 11:17 am
I'm not a fan of arbitrary percent based trailing stops.
Not a fan of it either, that'why I mentioned that for day trading I normally use a 2 ATR for the beginning, and as see the trend of the trade is losing momentum, then I decrease the slack of the trail. But you are right about one thing - its all specific setup. Well, regarding chart reading - I know this and that, unfortunately do not have plenty of time to dedicate (and even was considering to stop until I found a bit more time, as I believe it's serious business and should be treated as such, and not as a game).
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Re: Combining GB with spread trend

Post by pmward » Mon May 25, 2020 2:22 pm

Vil wrote:
Mon May 25, 2020 11:33 am
pmward wrote:
Mon May 25, 2020 11:17 am
I'm not a fan of arbitrary percent based trailing stops.
Not a fan of it either, that'why I mentioned that for day trading I normally use a 2 ATR for the beginning, and as see the trend of the trade is losing momentum, then I decrease the slack of the trail. But you are right about one thing - its all specific setup. Well, regarding chart reading - I know this and that, unfortunately do not have plenty of time to dedicate (and even was considering to stop until I found a bit more time, as I believe it's serious business and should be treated as such, and not as a game).
A course like this is probably up your alley https://mystrategicforecast.com/lazyeminitrader/. It's a 5 hour video course and quickly and efficiently covers all the basics of candlestick charting. It's geared towards day traders as well, which you seem to be interested in (though all of this stuff is applicable to any timeframe, it's just that this guy is a day trader so this specific course looks mostly at intraday charts to show the points). I took it a few years back and really got a lot out of it. The info here is still the foundation of how I look at candlestick charts to this day. Matter of fact I went back through it recently in helping me with my new strategy. It also helps if you follow his daily YouTube market recap videos each day for awhile after taking the course to help really drive the info home. If you plan on trading then it's a price well worth paying to really learn how to read a candlestick chart well. David Frost is one of the best at teaching candlestick charting that I'm aware of. He's also really entertaining, so that helps.
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Re: Combining GB with spread trend

Post by Vil » Tue May 26, 2020 1:04 pm

pmward wrote:
Mon May 25, 2020 2:22 pm
A course like this is probably up your alley https://mystrategicforecast.com/lazyeminitrader/.
Thanks pm, I have heard this guy previously. Not aware of how good he is in trading (and teaching), though I do not like his obsessive style of "I am nr.1 ", which is fairly often in the trading field, as you are pretty much aware. Dunno if it's only me, but I do not like that sort of aggressive marketing as receiving 4 emails the next couple of hours following the registration on the site (which is actually the case since I registered on mystrategicforecast.com). Anyway - thanks for the advice/s, always worth.
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Re: Combining GB with spread trend

Post by pmward » Tue May 26, 2020 2:37 pm

Vil wrote:
Tue May 26, 2020 1:04 pm
pmward wrote:
Mon May 25, 2020 2:22 pm
A course like this is probably up your alley https://mystrategicforecast.com/lazyeminitrader/.
Thanks pm, I have heard this guy previously. Not aware of how good he is in trading (and teaching), though I do not like his obsessive style of "I am nr.1 ", which is fairly often in the trading field, as you are pretty much aware. Dunno if it's only me, but I do not like that sort of aggressive marketing as receiving 4 emails the next couple of hours following the registration on the site (which is actually the case since I registered on mystrategicforecast.com). Anyway - thanks for the advice/s, always worth.
He is a good trader and teacher. I would not recommend him otherwise. Everywhere these days over emails, I just personally set those I don't want to junk. That being said, there are other places to learn the same stuff. It's really a course in the fundamentals of candlestick charting. It's just that most places will require more time than 5 hours to cover all the info. He really distills a lot of info short and sweet into that course. You'd mentioned time was your biggest constraint and that was why I made the recommendation.
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Re: Combining GB with spread trend

Post by pmward » Wed Jun 03, 2020 11:05 am

Have not posted any charts in awhile, mostly because markets have been boring the last couple of weeks. Pretty much everything has just been consolidating and nothing has really changed or resolved. The only people that have been making any money are day traders. Interesting look today on GDX though. We bounced pretty strongly off the support at ~32.50. If someone is looking to buy GDX this is a good low risk, high reward entry, and you can currently get in at 33.23, and a daily close below 32.50 would be the signal to sell.
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Re: Combining GB with spread trend

Post by pmward » Wed Jun 03, 2020 8:00 pm

Another chart worth checking back in on today. What I refer to as "the most important chart in the world" the USD broke down last week from that triangle pattern I had annotated here a few weeks back, and boy did it ever break down from it! It's been dropping like a rock. I think it's a really good omen for the economy, stocks, and metals going forward that the dollar is falling; let's hope this breakdown continues. I would really love to see us get back down around those March lows, although that 96 area is likely to provide a bit of resistance.
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Re: Combining GB with spread trend

Post by pmward » Thu Jun 04, 2020 11:07 am

Today we are going to look at another breakdown, TLT. You can see the pennant formation I've been tracking for months now broke down a few days ago. We are getting close now to the 50% Fib retracement and the 100 day SMA. I really like the look of that 61.8% Fib retracement having the 200 day SMA a couple dollars below (which will keep getting closer as the days go on), the top of that final big breakdown candle from March in the same area, we have a standard measured move from the formation breakdown hitting the same target area, AND we also have fat round number psychological support at 150. So there are multiple reasons TLT should find support and bounce from this general area, so a very low risk/high reward setup for a swing trade. I'm currently stalking a trade in this area if/when we get down there.

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Re: Combining GB with spread trend

Post by pmward » Thu Jun 04, 2020 1:30 pm

An interesting sentiment indicator here, the Put/Call spread. We are currently back at the same bullish range we were in during the meltup prior to the crash. Historically, it's incredibly rare that the options market gets this bullishly aligned. Over the last couple days I have swapped from bullish on equities to cautious/neutral. This is one of the reasons why.
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Re: Combining GB with spread trend

Post by Vil » Fri Jun 05, 2020 7:52 am

pmward wrote:
Thu Jun 04, 2020 11:07 am
I'm currently stalking a trade in this area if/when we get down there.
I do not see anything positive yet for TLT. IS04 (in Europe) opened with some -1.5% gap.. Still, it has to fall.. :)
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 8:28 am

Vil wrote:
Fri Jun 05, 2020 7:52 am
pmward wrote:
Thu Jun 04, 2020 11:07 am
I'm currently stalking a trade in this area if/when we get down there.
I do not see anything positive yet for TLT. IS04 (in Europe) opened with some -1.5% gap.. Still, it has to fall.. :)
Yeah, I'm looking for a dip buy basically around $150, on a swing trade (looking to play a couple week to couple month bounce). What makes this area attractive to me is I can have a really tight stop to GTFO with minimal losses if I'm wrong. There's so much support there that it is very likely to bounce. AKA my new strategy I'm trying of playing bounces off support instead of just breakouts, so buying weakness instead of buying strength.
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 9:09 am

Do or die time for GLD. We are testing the bottom of the sideways consolidation pattern it's been in going back to 9 Apr. So far it is bouncing from it. If it closes below that 157.70 it would be a very bad sign and would likely fall to the bottom of the trend channel around 153. It did break the 50 day SMA though. I am also currently in a day trade for GDX today, playing the bounce off support on that chart today. That's been a nice 2% in less than an hour trade. If GDX closes the day/week below 32.50 though my entire long position is getting closed today. SLV is holding up a bit better than GLD and GDX technically speaking, so my SLV trade is not in danger of being closed today like the other two. Ugly day for metals in general. The question to ask is, is this the start of a breakdown or is it the capitulation bottom of the correction before the next leg up? We will have to wait and see.
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 1:35 pm

I am exiting all my metals positions today (aside from the gold in my PP of course). "Know when to fold 'em". I have a nice profit on the whole and it is time to ring the cash register. I see other opportunities for this money in the short term. Still bullish on metals long term, but I would prefer to wait for another entry that I have more confidence in. In the short term, the rotation of strength is a pretty strong wind to try to fight at the moment.
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Re: Combining GB with spread trend

Post by pmward » Thu Jun 11, 2020 11:00 am

Looks like the breakdown in TLT was a fakeout. I was really hoping to load up at $150, but it looks like all the market was willing to give was $153. We are now not only back above the level that was providing strong support prior to the breakdown (the 38.2% retracement at $162) but we are also now above the top of that pennant formation.

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This market is so incredibly difficult to read right now. Fake break downs (like TLT and GDX) and fake break outs (like small-caps, value, energy, financials, transports, etc) are everywhere. Buy the rumor, sell the news is the name of the game right now. And all the big break outs and break downs are coming in the form of massive gaps pre-market. I wish I wouldn't have closed my metals trades on Friday, as I got a bit of a pie in the face on that one. The last week or two has been the most difficult market environment to read I've ever seen. So in my speculative bucket I've basically just brought my portfolio to be more neutral at the moment. I've sold some stocks, bought some TLT, and put back on some of my metals trades. So for my portfolio as a whole including all 3 buckets (PP, quant, and trading buckets) I'm close to my "home base" of a modified GB until the dust settles and I'm able to get a clearer read of the markets. This is a great environment for a day trader, but it's hard to not get chopped up in this environment if you're an intermediate term trader. Also, my quant bucket is threatening to go risk off in the coming days if this selloff continues.
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Re: Combining GB with spread trend

Post by pmward » Thu Jun 11, 2020 3:28 pm

Ugly, ugly, ugly day out there. My quant risk off signal did trigger today. Also, see the chart of the S&P, that is what is called an island reversal. See that little island floating around in the sky? That is a powerful reversal pattern, and it's a pretty ominous sign, especially on a day that the VIX spiked 50% in a single day. The other side of the coin, the S&P did close just barely above 3000, which is support in multiple ways. What do the bears want? To gap us below and close below 3000 & the 200 day SMA. What do the bulls want? To close that gap below the "island" as quickly as possible, making this pullback like a slingshot pulling back to launch further. They don't have long though, a few days at most to close that gap, and that won't be easy now that the bears see blood in the water. There's a good potential low risk/high reward short or long trade on the table depending on how this resolves. I would say things are looking slightly more in the bears favor at the moment, but the bulls do have that very important 3000 level to hang their hat on, as long as we are above 3000 the bulls have a chance.
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Re: Combining GB with spread trend

Post by Vil » Fri Jun 12, 2020 2:28 am

pmward wrote:
Thu Jun 11, 2020 11:00 am
The last week or two has been the most difficult market environment to read I've ever seen.
True. I moved almost all of my investments to PP till the things calm down and I find more time to dedicate (and that might be months from now..). It's the wisest thing for me. Still one can gain something in this choppy market with 5min/VWAP, but that would mean sitting in front of charts which I cannot do at the moment. I got a nice punch on not moving on time part of my portfolio to hedged instrument, and EUR/USD got a very nice spike the last 2-3 weeks. But OK, as they say its a tuition fee ;D Good luck, pm.
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 12, 2020 8:20 am

Vil wrote:
Fri Jun 12, 2020 2:28 am
pmward wrote:
Thu Jun 11, 2020 11:00 am
The last week or two has been the most difficult market environment to read I've ever seen.
True. I moved almost all of my investments to PP till the things calm down and I find more time to dedicate (and that might be months from now..). It's the wisest thing for me. Still one can gain something in this choppy market with 5min/VWAP, but that would mean sitting in front of charts which I cannot do at the moment. I got a nice punch on not moving on time part of my portfolio to hedged instrument, and EUR/USD got a very nice spike the last 2-3 weeks. But OK, as they say its a tuition fee ;D Good luck, pm.
Yeah, this market is just crazy right now. I think the effects of all the yolo Robinhood traders are the root cause. Either way, like you I don't have the time to day trade. I have a career. I'm able to check in periodically on the markets throughout the day, but I do not have the time to truly intraday trade. Intermediate signals are not working right now. Thankfully, with my past experience I have learned that these things periodically come in waves, and that when the intermediate signals I use stop working the worst thing I can do is to continue pushing the button. The best thing I can do is to just sit on my hands a bit until intermediate signals inevitably start getting follow through again. For the last two weeks we have been in a market where every intermediate signal, long or short, fails spectacularly within a week. It's easy to get chopped up if one is not cautious, at least for those traders like me that hold overnight. The last time this happened was spring 2018. Since then, intermediate signals have worked beautifully. Just like then, it will likely clear itself up in a month or two. In the meantime, I'm ok defaulting back to a GB-ish portfolio on the whole.

Things are looking interesting pre-market. SPY is looking like it wants to test the top of the breakout candle from yesterday right out of the gate. That should provide resistance at least intraday on the first pass. If I were a day trader, that would be about where I would put on an intraday short trade. Is it going to be a gap and crap? Or are they going to be able to close above it, and start working towards closing that island reversal gap? They don't have long to close that gap. Every day that the island stays in place increases the odds of follow through to the downside. The bullish island reversal from the first week of April never even got into the gap range. The day after the pattern formed the market did a gap & crap to make it look like the break out was going to fail and they were going to go down to close the gap, but then it immediately followed through and ripped higher. Likewise, how the market behaves today and Monday are similarly important. It's not surprising to see a bounce today at the open. The bullish island reversal in April shows the power this pattern can have, I mean this whole rally came from that reversal. First step the bulls would need to do is at least close us above the breakdown candle yesterday at SPY 311.46. As long as we are below 311.46 the ball is in the bears court. The bears, their job is to close the market below 3k. Right now they have the ball, but they are only in field goal distance. The touchdown is a close sub 3k. Until one of those two things happens, a close above 311.46 or a close below 300, we are basically in a waiting pattern.
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Re: Combining GB with spread trend

Post by pmward » Wed Jun 17, 2020 11:31 am

A couple interesting looks today. We are going to take a look at the VIX and the Put/Call ratio. We obviously had that massive vol spike last thurs when the market plummeted 5%. Since then, the market has been hit with nothing but furious panic buying. There is a disconnect between the market and the VIX at the moment. You can see below that while the market has recovered most of the drop, the VIX is still very elevated. It's seen a slight dip, but not equivalent to the SPY price recovery. One would normally expect that after 4 up days in a row that volatility would go down drastically. Instead, the volatility is staying elevated. Is this a leading indication of what's to come? I will also say that strangely, even though my vol based quant strategy went risk off last week, it is still just barely risk off as we speak. I wonder how this will resolve, I'll either get lucky and the market will follow through to the downside, or I will get unlucky and lock in a small whipsaw loss likely in the next trading day or two.

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Next we will take a look at the Put/Call ratio. Last week prior to the Thurs swoon we hit the all-time bullish reading for this metric. There has been no time in history that the options markets were as excessively bullish as they were early last week. Also of note, prior to the crash in Feb we set the record as well. So we broke Feb's record last week. This is generally a contrarian bearish indication when this happens. In a normal market environment the Put/Call ratio is in bearish territory. Why? Because the big institutions use Puts to hedge their longs. Big institutions buy way more Puts than they do Calls. It's the retail investors that make up the majority of the Call volume. So, this means that retail are all in levered long. Notice how the Put/Call ratio did pull-back to 1.0 after last Thurs, but how quickly and aggressively it launched back to super bullish territory. We're right back in the territory we were in during the Jan-Feb melt-up. Retail really believes that all dips can be bought and that there is no such thing as risk in the markets anymore. This will work until it doesn't. Eventually, all these panic dip buyers will get blown up.

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Even I am getting surprised at just how furious the buying has been lately (which means something considering I have pretty much been the lone bull on this forum for the last couple months). All technical indications on the SPY price action are still bullishly aligned (especially since we got above that important 312 area yesterday). BUT these two indicators here keep me very cautious. Are these the two canaries in the coal mine that are trying to give us an early warning signal? I think we will find the answer to that question soon. We have quadruple witching on Friday, and when dealers roll off all that gamma it removes a large degree of protection against a market drop. Could this be just like Feb, where we stayed bullish until the very day of options expiry, and as soon as expiry was over the market started to correct? We will find out. I always find divergences like these interesting. I have no idea how this will resolve, I just know it will resolve, and until that happens be careful out there.
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Re: Combining GB with spread trend

Post by pmward » Mon Jun 22, 2020 1:46 pm

GLD finally breaking above that $165 level that has been a hard ceiling going back to mid April. It's been getting some selling pressure late in the day though. GLD hasn't even been able to poke above $165 intraday yet until today. Can it close above that all-important $165? Or is it going to get sold down into the close and have to try again another day? USD keeps getting hammered ever since it broke down from that triangle pattern, eventually if this keeps up it has to start filtering into more GLD upside. Also, that GLD:SPY ratio is starting to go up again, and RSI and momentum are both looking like they are finally starting to show life again after flatlining for weeks.
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Re: Combining GB with spread trend

Post by pmward » Mon Jun 22, 2020 4:08 pm

Ding ding, GLD $165.09 closing, for a new cycle closing high. Finished in dramatic fashion, as the sellers really came out strong and tried to pull it below that important $165 in the final hour. I thought for sure it was going to crap out, but somehow the bulls got the job done... barely. But if a runner in baseball "barely" makes it to home plate in time, he still scored the point. A scored point is a scored point. Now we see if they can get follow through tomorrow. The next BIG resistance level is $174. That one has been rejected strongly multiple times in the 2011/2012 timeframe before the real bear market began. Arguably, the bear market in GLD began when it rejected $174 that final time in 2012. After that rejection it just dropped like a rock for many months in a row. I think that $174 is going to prove difficult to get through. Especially since getting through there would put the all-time highs at $185.85 in sight.
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Re: Combining GB with spread trend

Post by Vil » Wed Nov 18, 2020 10:44 am

Hey, just came across to say 'hi'. Can see you're back, which is good (last time I was in US, was during the 2016 elections and it was the same sh*tty atmosphere as now... well, a bit less sh*tty ;D ) My day trading adventures (even though quite rare) are still well in the profit zone, so cannot complain too much. Still, I do not believe on non-horizontal support/resistance lines haha.
By the way, following your advice (but as I had the feeling I would not get too much from the other Frost' courses), I took his Morning gaps.. Well, to be honest I was a (tiny) bit disappointed, as my fears that all of it relies on pre-market data (and there is no such animal in EU markets) were realized. Not that one cannot still profit from it, but really should be quick with gap scanners, Fib tools and order placement. Anyway, it's good that I had a view from another angle, any different point of view is always welcome, so, thanks for it! I am still pretty much convinced that Fib retracement gives more reliable data when it coincides with evident (horizontal! ;D ) support/resistance .. One could argue of course that its not coincidence that those lines match sometimes..

PS. Sorry, if you you consider my post as polluting your thread.
pmward
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Re: Combining GB with spread trend

Post by pmward » Wed Nov 18, 2020 11:00 am

Vil wrote:
Wed Nov 18, 2020 10:44 am
Hey, just came across to say 'hi'. Can see you're back, which is good (last time I was in US, was during the 2016 elections and it was the same sh*tty atmosphere as now... well, a bit less sh*tty ;D ) My day trading adventures (even though quite rare) are still well in the profit zone, so cannot complain too much. Still, I do not believe on non-horizontal support/resistance lines haha.
By the way, following your advice (but as I had the feeling I would not get too much from the other Frost' courses), I took his Morning gaps.. Well, to be honest I was a (tiny) bit disappointed, as my fears that all of it relies on pre-market data (and there is no such animal in EU markets) were realized. Not that one cannot still profit from it, but really should be quick with gap scanners, Fib tools and order placement. Anyway, it's good that I had a view from another angle, any different point of view is always welcome, so, thanks for it! I am still pretty much convinced that Fib retracement gives more reliable data when it coincides with evident (horizontal! ;D ) support/resistance .. One could argue of course that its not coincidence that those lines match sometimes..

PS. Sorry, if you you consider my post as polluting your thread.
Yeah, without pre-market data gap trading is pretty difficult. Non-horizontal support/resistance lines can be really strong, but they need to be tested more than horizontal ones. Something like the trend line off the 2009 lows comes to mind as a strong non-horizontal support line that has come into play a few times in the last couple of years. But whatever works for you. Everyone has different strategies, and that's what makes a market.

I've grown fascinated in recent months (started before I left) with volatility and it's effect on the market. In many ways volatility is the tail that wags the dog. I believe I had 40% of my portfolio in the volatility based quant strategy I was playing with back then, and these days I'm up to 70% (not including ~25% leverage). The way it sidestepped the March, Sept, and Oct dips in the market has helped build my confidence in the model. I wasn't able to just look at back testing, I was able to ride along with real cash on the line and get a feel for it in 3 separate "risk off" periods. So I'm not doing as much discretionary trading these days. Really only about 10% of my total portfolio is ear marked for discretionary trades, and with those I'm focusing on more medium term than short term. The rest of my portfolio is all rules based in one shape or form.
pmward
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Re: Combining GB with spread trend

Post by pmward » Fri Nov 20, 2020 11:45 am

The EEM:SPY spread on the weekly chart is looking like it's trying to confirm a bottom, with a breakout this week. We are trying to close above prior resistance. We also have a short term uptrend in place both in price and relative strength (purples lines). Matter of fact there has been a bullish divergence going back to the Q4 2018 selloff. Look how RSI has been in an uptrend while price was continuing to go down until the bottom in May of this year. RSI is also decisively above 50, which is a level it's spent hardly any time in going all the way back to spring of 2018. We also have now 5 consecutive weeks closing above the 50 period SMA. Until this last 5 week period, we have had a total of only 2 weeks closed above the 50 period line going back to spring 2018. I would say all evidence in hand says probability is high of an emerging markets bottom, relative to the SPY. Even just a mean reversion to the 200 period SMA would be an ~11% out performance for EEM relative to SPY. My levered quant strategy currently has me pretty heavily into EM's. I have hope.

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