Oil prices trading above $107 a barrel put a dampening effect on prices today. The Russell 2000 opened even today and traded in a volatile 8 point range for the first hour or so. Here are the charts for the first and second half of the day.
First Half Chart
Click on chart to enlarge.
Second Half Chart
Click on chart to enlarge.
I sent out an e-mail this morning with the question from one of my readers about when does a trader’s trick become invalid. If you missed it, I am reprinting it here:
Question from Bob V.
In fridays(Mar 7) report you state that on trade 5 ” The pullback on the traders trick set-up was greater than I normally like…..” Is there a point when the trade becomes invalid?
Bob V
A:
Trade 1 for March 10, 2008
Hi Bob,
I thought I would answer your question with a set-up that happened this morning. There was a trend line break below the 56 EMA followed by a trader’s trick set-up. As long as the price does not break a resistance area (that area can be the 56 EMA, a trend line from above, an important fib level such as the 50 or 61% fib level), then the trader’s trick set-up is valid. In other words, in this case, the price came back to the 56 EMA, and a trend line that it just broke and a 61% fib area, so the trade was valid (see attached chart). I hope this helps.
So for the first trade of the day (as seen in the above chart), there was a trend line break below the 56 EMA followed by a trader’s trick set-up. Price pulled back to the trend line that it just broke and the 56 EMA (just a tick or two below), and the 61% fib level. When a trade lines up with several of the indicators that you use, it just strengthens the trade set-up. So thanks to Bob for the question.
The second trade happened after a trend line break below the 56 EMA followed by a trader’s trick set-up. This could have been considered a nightcrawler set up as it “crawled” up the trend line that it just broke. The third trade happened after the market screamed down pausing for a little bobber set-up. The trade made just a little over the 2 point objective. Here is the chart for the 2nd and 3rd trade.
Trade 2 and 3
Click on chart to enlarge.
The market trade in a choppy fashion from 11:00 am CST to 12:30 pm CST (remember my times of day post?), and then had a trend line break below the 56 EMA followed by a trader’s trick set-up. This trade took forever to make its objective, and as you know from past posts, that type of trade gives me heartburn.
The last trade of the day was a bobber set-up. The set-up happened after a big 3 bar sell off and was stopped out for a 2 point loss. This trade was up 1 point and then stopped out for the loss to the tick. Sometimes that happens in a jumpy market. Here is the chart for trades 4 and 5.
Trade 4 and 5
Click in chart to enlarge.
The rest of the day was choppy with lots of tails and large bars. So, for the day, there were 5 valid set-ups and 4 winning trades and one losing trade for a net profit of $600, ignoring slippage an commission. Again another whippy and volatile day. The Russell 2000 e-mini’s bounded off the low that the market made on January 22 of this year. That level (645.40) will be critical support for the Russell. A break of that level may cause more downside action. Time will tell.
I hope that the information presented in this post help you to catch a whopper.
Best regards,
Ron
This is not a solicitation to buy or sell.
There is a risk in any investment.
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