Why do the markets only seem to move in the first couple hours each day?
Rick and Cory chat first about the continued fall in the bond market – is the bottom soon to be found? Then we move on to the slow conventional markets and what it will take to move them in a more substantial way.
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Good thoughts on the Bond market, Dirt Balls that move the pre-markets first 30 minutes of trading, and the Fed news blather. Thanks Rick and Cory.
Shad, if I may….
I know a lot of people gripe and complain about the “first 30 minutes” of trading. In fact, I can show you dozens, maybe hundreds of traders who will tell you to “stay out of the markets for the first 30 minutes because its just too choppy.”
That type of advice, I’ve found to be detrimental to my trading, as the majority of the moves take place in the first hour and hence, most of the profits. But my style of trading is adaptable to this type of market environment, while many other traders haven’t adapted or chose not too.
To each their own
stay frosty
Correct.
Mark, do you
… do you mind sharing what timeframe you use? Like, 5 min charts?
FYI either way I’m staying away from the 1st 30 mins still!
Thanks much.
Howdy Bill!
Sure, no problem sharing my info.
I use a combination of time frames for my analysis, but when day trading, I use the 5 and 15 minute charts for both entry and exit confirmations. I use the hourly time frame to establish the intermediate trend and where a stock may be turning based on its wave structure and the alignment of two oscillators: Slow Stochastics and the RSI – both have standard settings. I use the Daily and Weekly for long term trend and larger Elliott Wave structures. I love the RSI because it helps to confirm and invalidate a wave pattern. THAT alone has saved me boo-koo bucks from entering a bad trade.
I utilize Elliott Wave Theory in determining what wave structure is playing out and what could be forming. In order for me to best determine the structure, I will break down the time frames in order to get the most accurate count I can. If the count is questionable on the 5 minute chart, I’ll drop to a 2 or 1 minute to make certain. That method, while tedious, has made me a lot of bacon. Especially when you see that a pattern is incomplete and it needs to move into a certain price territory in order to confirm. This is where Fibonacci extensions and retracements come in SUPER handy. Corrective Patterns have both interior and exterior relationships, so when dealing with Complex Corrective structures, such as a Double Combination or Triple Combination, you need to know those EXTERIOR fibonacci relationships.
I then look to see what is lining up with those fibonacci numbers, be it: support/resistance, a gap, another “measured move” price target from a larger time frame’s pattern, pivot points, etc. The greater the cluster of points – the greater the chance of price targets being hit.
AMZN and GOOGL both had a drop and bounce this morning. I played both the drop and the bounce. I also played NFLX 630 weekly calls right as it dropped into the target zone where a fibonacci retracement number and the Daily 8 EMA came together.
I don’t day trade by jumping around from stock to stock looking for a set-up. I stick with only five stocks and etfs to day trade. All my swing trades are done in stocks or etfs that I feel will be experiencing a strong move.
If you have a stockcharts account I can link you my 15 minute charts that have the targets and technicals on them so you can better understand what it is I’m talking about.
stay frosty
Great analysis, and I figured you were were an Elliot Wave trader based on some of your comments and targets in the past. Good plan on using the RSI to referee the wave counts.
I like that you drill down from the 5 minutes charts to 1 or 2 minute charts for clarity. Sometimes tedious analysis is worth the effort. I try to keep it simple, but sometimes when there is not a clear trend and a potential turning point or breakout, then I slow down to dive a little deeper.
Good thoughts though Mark Alan. Cheers!
I’ll confess, I often trade in the first 30 minutes because there can be outsized swings to the up or downside,and then a recoil. Many times I actually trade in the premarket, and then when the first 30 minutes get wild, I take profits and wait for a mean reversion to start a new position. I enjoy the chaos personally, but don’t believe it gives you a fair representation of the trend for the day (that is peoples gripe with it…. the open can be counter trend many days).
BTW it has been in the 90’s and very humid here so…..not very frosty 🙁
Hot and humid here too! Nearly 96 and we have a chance of getting thunderstorms tonight.
Some postulate that the “manipulation” is jammed down peoples throats in the first 30 minutes, and spills over from pre-market rigging. I don’t know, but it is crazy, and I agree many times the biggest moves are the first hour or the last 15 minutes.
What I like about playing the first hour is that my trading is usually over and done and I can focus on something else for the day, like taking care of TWO disabled parents…sigh. Sadly I don’t get to trade a lot of days do to getting them up and ready in the mornings, but I carry my laptop with me everywhere around the house so I can do all my charting and trading whenever time allows. I can’t simply go into another room and close the door and forget about the world. So most of my trading is done from a laptop and not some fancy high speed, multi-monitor system. Maybe one day 🙂
That is fantastic if you have a daily goal that is met right away in the first hour, to free up the mind. I only have 2 computers. My work laptop – all business, and my personal computer all trading (just one screen – but it is a large flatscreen monitor). I just toggle between tabs all day since I just have the one screen.
Rick, if you like David Stockman, here was his audio on KWN.
David A. Stockman – Former Director of the US Office of Management and Budget (USOMB), Economic Policy Maker, Politician, Financier & Acclaimed Author:
Regarding TLT, it’s made a divergent lower low on the daily and 2 hr charts, so I’m still hoping it will head up so I can get on board. As a (daily chart swing) trade.
I’m watching TLT as well very closely for an entry point, but it keeps falling and yields rise so I’ve been hesitant to wade in. (glad I’ve waited BTW)
Wait for 30 on the RSI for the weekly chart.
Currently RSI is at 34.75. Good point FranSix:
http://stockcharts.com/h-sc/ui?s=TLT&p=D&b=5&g=0&id=p77885877149
That’s the daily chart. It’s already been below 30.
I’m sorry and just read your comment more carefully. I thought you meant with the daily came back to 30 on the RSI.
OK – Here’ s the weekly with the RSI at 38.52. Better?
http://stockcharts.com/h-sc/ui?s=TLT&p=W&b=5&g=0&id=p29288034131
Now the TLT weekly chart has RSI at 37.35 and falling…..
http://stockcharts.com/h-sc/ui?s=TLT&p=W&b=5&g=0&id=p81113232406
The bond market is a symptom of a steepening yield curve after an inverted yield curve between U.S treasury bills and Euro area bills.
Recommended quick read (and will post elsewhere):
http://www.financialsense.com/contributors/chris-puplava/global-growth-stabilizing-right-on-cue
Best to all and GL investing/trading.
LPG
“DIRT BALLS”………is correct………