The ACD Method

[Maverick74]

Quote from DT3:

Nat gas holding up while crude makes A down

Crude oil had a textbook failed QTR A up. Once you get that failure, you need to be very careful about buying it. You want to be long into the tag.

 

[Maverick74]

Quote from Maverick74:

Shan and I had a "long" talk about this on Friday in the office. LOL.

Here is a summary of what I said. I am neither bullish nor bearish. I see the market through the lens of volatility and it's why I use and love ACD. June saw us trade from 1260 to 1375 pretty much in a straight shot up. I think the market has to absorb this move. I told Shan that I believe we will not break and confirm either the monthly A up or A down this month. That means with the monthly A up in ES at 1383, I think that level will hold. We may trade 1390 or the 1375 level may hold but I don't think we "confirm". On the downside that level is 1328. Again, we might trade down to 1315 or 1320 but we don't confirm. I think the market will be range bound.

I think any large move we get will happen in August and September. So right now that puts us right in the middle between the two goal posts. That means we could trade higher and fail and grind lower the rest of the month or we could hit the lower end of the range and grind back higher. I'm agnostic as to which is more likely to happen. Markets rarely move straight up or straight down. If they did, trading would be very very easy.

Having said this, there are plenty of stocks breaking out to new all time highs and many sector ETF's at or near 52 week highs. There is something for everyone.

This was my post back on July 7th. As you can see, this played out pretty much as I expected. We closed the gap at the monthly A down and bounced off the A down twice and failed at the monthly A up twice. I mentioned we might trade through the A down a little but but not confirm. This price action is setting up for some fireworks in August.

 

[DT3]

Quote from Maverick74:

Crude oil had a textbook failed QTR A up. Once you get that failure, you need to be very careful about buying it. You want to be long into the tag.

I would love to see oil confirming NG move, would you be worried if you were long NG?

 

[DT3]

Question regarding +/- days.

In the book Fisher says if

opening range < pivot range< close then it's a plus day

Is he just referring to the open when he says opening range or is he actually talking about the entire OR? In other words the product would have to stay above the pivot range for the entire OR?

 

[Maverick74]

Quote from DT3:

Question regarding +/- days.

In the book Fisher says if

opening range < pivot range< close then it's a plus day

Is he just referring to the open when he says opening range or is he actually talking about the entire OR? In other words the product would have to stay above the pivot range for the entire OR?

He structured that poorly. Just read it in reverse, what he is saying is if today, the market closes both above it's opening range and above it's pivot range, then it's a plus day.

So if Crude Oil's opening range is 88.00 to 88.40 and the pivot range is 88.35 to 88.50 and Crude closes at 88.60 then today would be a plus day.

 

[Maverick74]

Quote from DT3:

I would love to see oil confirming NG move, would you be worried if you were long NG?

There are different factors that drive oil and nat gas. They are not terribly correlated. Oil trades as a risk asset, natty does not.

 

[LEAPup]

Quote from Maverick74:

This was my post back on July 7th. As you can see, this played out pretty much as I expected. We closed the gap at the monthly A down and bounced off the A down twice and failed at the monthly A up twice. I mentioned we might trade through the A down a little but but not confirm. This price action is setting up for some fireworks in August.

Noticed you follow volume and open interest. U ever read the book "Volume and open interest" by Kenneth Shaleen? Good stuff!

 

[Maverick74]

Quote from LEAPup:

Noticed you follow volume and open interest. U ever read the book "Volume and open interest" by Kenneth Shaleen? Good stuff!

I know the book but I don't really look at volume and open interest. I'm all about volatility. I have heard that's a good book though. I think volatility is more important the volume and it's one of the reasons why ACD resonates so well with me.

 

[Maverick74]

 

[Shanb]

Something to point out, that at least to me is very important. I trade spreads, so I am always looking at correlation and changes in correlation in the market. I've noticed that the sectors i look at are starting to have some orderly rotation.

Correlations that began to unwind a couple weeks ago are starting to stick a bit...so less mean reversion there. My numberlines have gotten alot weaker of the last several days, and clearly this is a market of have's and have nots.

Will start throwing some swings out there when i see a good setup and see if this change sticks. Regardless definite changes in market action!