The 3-2-1 Approach: A Simplified Method for Trading Any Market

Options Expiration Friday

F2 Comments: Options expiration favors a close between 117-00 and 118-00. Sellers were in the market early and the sellers hit the bids at 118-04/08 shortly after the opening. The selling didn’t stop until 117-105 was touched. Thereafter it was a range trade favoring the sellers through the close. The market closed favoring a sell off of tomorrow’s opening too. Want to sell early strength and see if 117-08/12 can be taken out. If not, will cover. First sell zone is 117-27/31. Back up sell is 118-03/07. Cover, if 117-08/12 holds.

F2PM8-21.jpg
 
A Breakout Trade Revisited

The breakout from the overnight range trade is one I have been keeping stats on for the last three weeks. At present, it is a 70% trade risking 4 ticks to make 4 ticks. Entry is 1 tick above or below the overnight range.

Those with plenty of patience can play for a runner, though I presently exclude myself from that category.
 

Attachments

Set-ups For Tuesday 8/26

F2 Comments: Whoa…what a day. The market exploded to the upside post option expiration day, a most unusual occurrence. Normally, post option expiration day is quiet. The volume on the rally was light. Someone wanted to get long and paid up too. The buying dried up over 119-00 and developing value held the market between 118-20-/28+. The close was off the highs, but the market did close in the top half of the distribution. The market can trade higher tomorrow w/some help from the news or ES. The first buy band is 118-17/21. The back-up buy is 118-10 OB. Market must take out 119-00 to hold today’s longs in their positions. If 119-00 is rejected, OK to trade form the short side of the market.

F2PM8-25.jpg
 
Start With An Idea For 8/27

F2 Comments: A consolidation day after Monday’s sharp rally, if you had to describe the market in one word. Support at 118-08 held as did resistance at 118-24/28. The close at 118-20/21 favored the high side. The volume done during the day favored the sell side of the market. So without a piece of conclusive news tomorrow I think the odds favor a trading range to higher day tomorrow, especially, if 118-08/10 is retested early and holds. Durable Goods is expected at +.1%. Will try to get the DOE Crude inventories before the market opens in the morning. Can sell failure at 118-24/28 or buy support at 118-08/12.

F2PM8-26.jpg
 
15 Minutes Of Hard Work Today

After the 8:30am news the Bond sold off sharply. The breakout from the overnight range trade was an easy winner. As you'll remember, the way to play this trade is to place a buy or sell stop 1 tick above and below the overnight range at about 8:15am eastern time, just before the market opens.

Whichever order is filled first is the short term direction of the market. Cancel the other order and manage the trade. I suggest a predefined stop and profit target, but you can play it any way you wish.

I only have data for the last month, but risking 4 ticks to make 4 ticks would have you up 44 ticks for the month. Thats $1,375 per lot traded. The last 7 trading days have been winners. Will this continue? Who knows.

If you missed that opportunity, another quickly followed. The news announcement bar had extremely high volume, as you can see in the attached chart. If it was volume exhaustion, price would eventually trade out the top of the spike bar. Today, it was continuation.

Taking the trade out the bottom of that bar allowed for another 4 ticks profit before retracing. Thats $125 per lot traded. Not bad for 15 minutes work. Every day should be this easy. There were many happy traders in the TIE trading room this morning.
 

Attachments

Heading Into A Holiday Weekend

F2 Comments: Market was on hold until the 5Y auction was out of the way. The auction was apparently a good one given the strong close and rally from 118-08/14. Tomorrow is the end of the month. Very little incentive to be a seller of Bonds tomorrow. Tomorrow’s news: Personal Income is expected at -.1%; Personal Spending at .3%; Chicago PMI at 49.9; and Michigan Sentiment at 62.3. Want to buy early weakness and see if 119-04/08 can be taken out. IF it holds, will exit our length and start to look at the short side of the market. First buy zone is at 118-21/15. Back up buy is at 188-13/17. Exit, and/or reverse, if 119-00/04 is rejected.

F2PM8-28.jpg
 
Prep For Tuesday's Trading

F2 Comments: The early news was bullish and the Bond failed to hold its initial gains. Failure to rally after bullish news started the selling and this selling was present into the close. The close was weak. The market is pointed lower w/out news on Tuesday. Construction Spending is called down .4% and ISM PMI is at 49.9. Only thing I see that could hold the Bond up was the weak close in the ES. If the ES is sideways to higher, want to sell 117-11/15 and see if 116-20/24 can be broken. Will cover, if not, and look to the long side of the market.

F2PM8-29.jpg
 
Follow-up To The Big Move

F2 Comments: Market sold as per the analysis. The inverse relationship w/the ES dominated the early trading. The news was supportive for Bonds as was the fall in commodity prices. When the ES couldn’t hold the 1300 level, the Bond began its recovery hitting 118-095 after the day session close. Some news to drive tomorrow’s trading: Factory Orders is expected at .4% and the Beige Book at 1400 EDT. If ES is sideways to lower, want to buy early weakness in the Bond and see if 118-12/20 can be taken out. If not, will exit this trade. 1st buy is 117-29/118-01. Back up buy is 117-21/25. Exit/and or reverse, if 118-12/20 is then rejected.

F2PM9-02.jpg
 
You must log in or register to reply here.
Back
Top