Trend Day on April 7tth

WARNING: Never post any opinion that can be proved wrong by an as yet unknown outcome. It's dangerous to reputations, subscription flow, and small animals.

And now back to our regularly scheduled prognostications.



Day was a little hard to fathom.
 
Quote from dbphoenix:



The call was not that the market would gap up. He made it clear in his post that that had already occurred. The "call" was that there would be a trend day.

As for the purpose of the post itself, it was not to call a trend day but to point out that rookie traders regularly trade yesterday's chart, i.e., they're trading the wrong scenario at the wrong time. Calling a trend day was no great trick, and I doubt that Brandon meant to give that impression. I pointed out on another thread last Friday that today or tomorrow would likely be a wide-range day. Given the contraction in ranges, that's a no-brainer.

--Db
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Quote from Brandonf:


....

Finally, as I write this the futures are up sharply on GLOBEX. As those of you who have been with us for any amount of time know, this is a significant event that traders should take note of for a few reasons. First of all trend days often occur after a large gap. Large gaps are emotional events, and this is at the core what causes a trend day, extremes in emotion. Secondly, large gaps have a tendancy to not be filled on the day they occur. While there are certainly no gaurantees in life or the market, the odds are favorable that tomorrow will be one of those days that the market gods throw us a "gift" in the form of a trend day. Show up ready.

Brandon
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Trend days occur after a large gap

Large gaps have a tendency to not be filled on the day they occur

Therefore, if the gap will not be filled because it is a large gap and the day of the gap will be a trend day, then it will be a trend day in the direction of the gap, which is up.

There are certainly no guarantees in life or the market, so the opinion stated may be wrong.

So, if you show up ready, would the strategy for the day be to buy every dip or just go long at open until stopped out?


pretzel
 
Just read this.. It's obvious the call was for an UP trend day, which was not the right call. Not like it really matters but thats my impression of it.
 
Quote from Ebo:

I love when the Rock Creatures pop out of their holes to toot their own horn on here!
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We had a trend day. I never said it woud be up or down. When we traded under 1076, it setup for a short with a MOC exit. Along the way we also had a number of 1 minute bear flags that provided good entries. Also, it was said before the fact. It's not like I came on here afterward and said roh rah rah. The opportunity is there if you follow a breakout system.

I did expect it would be a trend day up. The first three trades I took today all expressed that and I lost. However, those were trades I took with out a geniune setup according to any system. Once the system came in I recouped all of the mornings losses and then some.

Brandon
 
Quote from stock777:

WARNING: Never post any opinion that can be proved wrong by an as yet unknown outcome. It's dangerous to reputations, subscription flow, and small animals.

And now back to our regularly scheduled prognostications.



Day was a little hard to fathom.
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It was'nt proven wrong. It was a simple observation that we would likely get a trend day, which we did. A trend day up would occur when the market opens at or near its lows and closes at or near its high. A trend day down occurs when the market opens at or near its highs, and closes at or near its lows. It would seem to me that we had a trend day down today.

Brandon
 
Quote from Brandonf:



We had a trend day. I never said it woud be up or down. When we traded under 1076, it setup for a short with a MOC exit. Along the way we also had a number of 1 minute bear flags that provided good entries. Also, it was said before the fact. It's not like I came on here afterward and said roh rah rah. The opportunity is there if you follow a breakout system.

I did expect it would be a trend day up. The first three trades I took today all expressed that and I lost. However, those were trades I took with out a geniune setup according to any system. Once the system came in I recouped all of the mornings losses and then some.

Brandon
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Good trading. :)

Dow had too much overhead. See my post this morning.
http://www.elitetrader.com/vb/showthread.php?s=&postid=234046#post234046

When it couldn't break that, in came the sellers. gave me a nice run up in treasuries.

Good luck.
 
Quote from ddog:

very nice call...

How is this a nice call since he said most large gap up days do not fill?

This one did.
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I have researched all of the gaps in the market going back several years. I shared a ton of the statistics and research from it here on ET (http://www.elitetrader.com/vb/showthread.php?s=&threadid=8127). We had the volatility coil and the large gap up, both of these led me to believe we would have a trend day up. When the market opened I expressed this opinion by going long and was stopped out. By noon I was down a little over two percent trading. At this point a lot of people left for the day, volume was light and the trend day call was "wrong". However, we had not had a setup yet using the volatility system. This did not occur until we broke under 1081 ( I was late and did not get in till 1076). This trade then calls for an exit Market On Close. Along the way, there was a number of nice continuation pattenrns for scalps as well.

Brandon
 
Quote from dbphoenix:



The call was not that the market would gap up. He made it clear in his post that that had already occurred. The "call" was that there would be a trend day.

As for the purpose of the post itself, it was not to call a trend day but to point out that rookie traders regularly trade yesterday's chart, i.e., they're trading the wrong scenario at the wrong time. Calling a trend day was no great trick, and I doubt that Brandon meant to give that impression. I pointed out on another thread last Friday that today or tomorrow would likely be a wide-range day. Given the contraction in ranges, that's a no-brainer.

--Db
More...

Exactly.
 
Quote from Brandonf:


...

Here are a few of the raw statistics we have compiled. (This study was done on the Nasdaq, all gaps that have occured since Jan 2, 1989, the data is kept current.
71% of gaps will fill on the day they occur.
The average gap is 1.17%
Smaller gaps fill in more often than larger ones (The exact percents are caclulated as are the odds of any amount of filling in 10% increments for our proprietary money managment systems)
Gaps that are twice as large as the average gap (2.34) remain open 61% of the time on the day they occur. Gaps that are 3 times larger than the average gap remain open 65% of the time on the day they occur, while gaps that are 3.5% larger than the average gap are left unfilled 89% of the time on the day they occur (only 21% of them are filled on the week they occur too, fwiw).
Given the above dry data we have developed systems that have us fading small gaps aggressively and average gaps but not as aggressively as well as tading in the direction of large gaps.
We have a 100% rules based approach (ie system)
.....

Enjoy,
Brandon
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The call was based on statistics.

Although the statistic is > 50%, it is not 100%.

So, nothing wrong with being "wrong".

I think the next time there is a large gap, the same call will be made?

How much was your stop loss for this kind of play? (The point where you will be proven "wrong" and just take the loss).

pretzel
 
Quote from dbphoenix:



The call was not that the market would gap up. He made it clear in his post that that had already occurred. The "call" was that there would be a trend day.

As for the purpose of the post itself, it was not to call a trend day but to point out that rookie traders regularly trade yesterday's chart, i.e., they're trading the wrong scenario at the wrong time. Calling a trend day was no great trick, and I doubt that Brandon meant to give that impression. I pointed out on another thread last Friday that today or tomorrow would likely be a wide-range day. Given the contraction in ranges, that's a no-brainer.

--Db
More...

The cycle will probably go on. Generally after a trend day the crowd can't wait to trade the next day because they are certain there will be continuation. The market usually goes back to the chop they been trying to avoid (and thus missed the trend day). Tomorrow the most likely course of action will be a scalp type day. Herky jerky type of movesm, while the crowd will try to approach it as a trend day.

Brandon
 
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