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

[bthomas]

Prep For 30 Year Auction Today

(06:39)_The buying continued after the day session close. Looks like the market will trade higher into the 30Y auction and then we will see if the downtrend resumes or not. My guess is that it will.

Some news to get through at 0830 EDT. Once that is past the focus will the whether the ES sells or not and the rest of the world’s stock markets say it will. Then onto the 30Y auction. No volume open interest data from yesterday from the CME yet to judge the Dealer’s activity. If they defend the buck this morning, we should trade up into the auction.

First buy zone is 126-01/05. Back up buy is 125-25/29. If 126-20 is rejected the 2nd time, OK to probe the short side of the market.

 

[bthomas]

Market Trades Higher Even With Negative News

F2 Comments: The market did trade higher today even with the early negative news. The market was on hold until the 30Y auction hit the market. The 30Y auction was better than the 10Y’s auction and the market rallied a point and half. The buying stopped at 127-07. The close was strong. Structurally, the market is pointed higher w/some help from the news and ES.

Can trade from either side. Can buy weakness from 126-00/12. Can sell failure at 127-08/12. Market needs to trade higher tomorrow or I think it will begin to sell, given the longer term downtrend

 

[bthomas]

ES Still Controlling the Bond

F2 Comments: It was a trading range day w/both support and resistance tested intraday. The close was a bit weak. If the ES can hold its gains, the Bond is pointed lower.

Some news to drive Monday’s trading: NY Empire Index is expected at -32.0; Net LT TIC Flows at 34.8; Capacity Utilization at 71.1%; Indus. Production at -1.2%. This news, if as projected, would be supportive. If the last couple of months are a guide, the direction of the ES will trump this news.

If the ES is sideways/higher, I want to sell the Bond, especially above 126-25. If the ES is lower, can be a buyer at 125-25/29. Plan on an exit at the opposite edges of the market.

 

[bthomas]

Early Selling Then Consolidation

F2 Comments: The market opened soft and quickly sold hitting 124-09 before the selling was over. Support level # 4 held and the market rallied and did hit our recommended sell zone at 125-07/11 w/a day session high of 125-13.

The rest of the day was a range trade w/a seller above 124-28 and a buyer below 124-20. By the close, the market activity analysis was for mixed to lower prices tomorrow without news or help from the ES.

Tomorrow’s news: Building Permits is expected at 510K; Starts at 453K; PPI at .4%; Core PPI at .1%.

If the ES is sideways/higher, want to sell early strength, especially above 125-07 and see if 124-20 can be taken out. If it holds, will cover. If the ES has broken 750 and is still being sold, OK to buy the 124-17/21 area with an exit, if 125-00/08 then holds.

 

[bthomas]

Expect More Selling on Wednesday

F2 Comments: the market tried to trade higher and did as long as the ES was selling. When the selling was over in the ES, the buying was over in the financials. The market compressed and coiled and finally began to sell in F period. This selling was present into the day session’s close. The structure and market activity analysis favors a retest of support and/or lower prices.

Tomorrow’s news: CPI is expected at .3%; Core CPI at .2%; Current Account Balance at -136.7 Byn.

First sell zone is 124-07/11. Back up sell is 124-19/23. Cover, if 123-20/24 then holds.

 

[bthomas]

FOMC Announcement Moves the Market Big Time

F2 Comments: the market opened soft and did try to break the OVN session’s low. Support held and the market began its rally that didn’t stop until 125-12 was hit. The market then went on hold until the FOMC announcement. The trial balloons that had been floated by the Fed were about 5 times lower than their actual announcement. Instead of a 2-300 Byn intervention, it was 1.75 T. And the fed’s forecast leaned more towards deflation and economic contraction instead of their opposites.

The market exploded and hit 132-18 before its close at 129-09. The news that needs to be sorted out is whether the Fed’s 1.75T is on top of the Treasury’s suggested 1.5T. Will look to buy early weakness, especially below 126-26 and see if we can get through 130/132-00. The OVN session should give us better support and resistance levels.

 

[bthomas]

Pause and Consolidation Today

F2 Comments: Today’s market paused/consolidated Wednesday’s explosive rally after the FOMC announcement. Pause days are to be expected. Then they are usually followed by a retracement of the move until new buyers/sellers re-enter the market.

No news to drive tomorrow’s trading. I think the market will probe lower looking for that price level that brings the buyers back into the market. The aggressive sell zone is 129-23/27. The back-up sell is 129-31/130-03. If 128-28 holds, will look to the long side of the market.

 

[ivanbaj]

Very nice! Keep up the good job. I can't believe I have not heard of you guys before. BTW Don is a mad scientist compared to you.

 

[bthomas]

Charles Cochran's Comments for Friday 3/20

F2 Comments: The market tried to rally as per that analysis but failed at 130-08/12, resistance held. The market held its early gains through C period and then the end of the week began to take over the market. The lower the market went the greater the temptation to sell profitable positions. This selling was present into the close.

The market is pointed lower for Monday. Only news on tap is Existing Home Sales is expected at 4.45 M. This number could come in higher than forecast due to lower interest rates.

Want to sell early strength and see if 128-20/24 can be taken out. If it holds, will cover. First sell band is 129-03/07. Back up sell is 129-11/15. Cover and/or reverse, if 128-20/24 holds.

 

[bthomas]

Strength in ES Breaks the Bond On Monday

F2 Comments: The analysis of Friday’s structure and market activity strongly suggested lower prices for today’s market. Our sale was conditioned on an ES that was sideways to higher. It took awhile for the ES to rally, but rally it finally did. This strength in the ES broke the Bond and it sold into its session’s end. The close was weak.

The market activity analysis favors lower prices tomorrow, if the ES continues its rally. If the ES reverses, this week’s auctions should bring in some buying in the financials.

Want to sell early strength and see if 127-28/128-00 can be broken. If it holds, will cover. 127-28 is a number that can hold. First sell zone is 128-19/23. Back up sell is 128-31 OB. Cover, if 127-28/128-00 holds.