Trend Days

B

Brandonf

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Two of the most important concepts in the market are trends and volatility cycles. Most people understand trends fairly well but really fall short when it comes to volatility.

On friday we had an NR7 (narrowest range of the last seven) trading day in the major indexes and in a number of stocks. Currently we also have trending indicators at the lowest level since 6/30. This along with the volatility constriction often occurs before a trend day. None of this suggests a direction (if I had to guess Id say it would be up, but it wont matter if there is signal short I would take that too).

On trend days the trading is in retests and breakouts. Also in the last 20 to 40 minutes of the day you tend to see a very large surge. Dont fade a breakout of the first hours high or low.

Brandon
 
On friday we had an NR7 (narrowest range of the last seven) trading day in the major indexes and in a number of stocks.
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Many nice setups are out there for Monday. Grab a handful or two of these with a little size on each and it can turn into a very nice day.
 
Quote from easyguru:

JEF, THO, SBUX, LM, ACMR, AMSG, EXPE, RATE, IACI, KRON, URBN, ORLY, EXPD is what I have on my list.
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I have most of those plus AMAT, BRCM, EBAY, AAPL, GILD, BGEN

One thing I am thinking though is that it looks like such a no brainer we go up, going down might be the best way to get the trend day. Would screw a lot of people and cause a big move.

Brandon
 
Evening Brandon-

Good observations. I especially agree with the "no fade" late day
suggestion. At least it is holding true for now.

Friday was a true test of a trader's patience with the market.
I personally waited 80% of the day sitting in a Bull Trade for 3 Hours measuring the upside potential in the Ascending Triangle
that we'd worked on forming early part of the day.

Waited a little too long for confirmation of the Descending Triangle to show that it took dominance in the market over our
choppy but upward trend and A.T.

However, even with the late short entry a trader could realize 6.0+ pts. from that short. If agressive a buy from 1273.50 on a reverse could have yielded a trader a tidy little sum in the final hour of trading.

Gotta love how the market is so fickle!

Take what you can get.

cheers-

momo




Quote from Brandonf:

Two of the most important concepts in the market are trends and volatility cycles. Most people understand trends fairly well but really fall short when it comes to volatility.

On friday we had an NR7 (narrowest range of the last seven) trading day in the major indexes and in a number of stocks. Currently we also have trending indicators at the lowest level since 6/30. This along with the volatility constriction often occurs before a trend day. None of this suggests a direction (if I had to guess Id say it would be up, but it wont matter if there is signal short I would take that too).

On trend days the trading is in retests and breakouts. Also in the last 20 to 40 minutes of the day you tend to see a very large surge. Dont fade a breakout of the first hours high or low.

Brandon
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Quote from Brandonf:

Two of the most important concepts in the market are trends and volatility cycles. Most people understand trends fairly well but really fall short when it comes to volatility.

On friday we had an NR7 (narrowest range of the last seven) trading day in the major indexes and in a number of stocks. Currently we also have trending indicators at the lowest level since 6/30. This along with the volatility constriction often occurs before a trend day. None of this suggests a direction (if I had to guess Id say it would be up, but it wont matter if there is signal short I would take that too).

On trend days the trading is in retests and breakouts. Also in the last 20 to 40 minutes of the day you tend to see a very large surge. Dont fade a breakout of the first hours high or low.

Brandon
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maybe i understood something wrong - but as far as i am able to tell - dow and sp did not have a nr7 day on friday.
 
Quote from Brandonf:



I have most of those plus AMAT, BRCM, EBAY, AAPL, GILD, BGEN

One thing I am thinking though is that it looks like such a no brainer we go up, going down might be the best way to get the trend day. Would screw a lot of people and cause a big move.

Brandon
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AMAT, BRCM, AAPL, BGEN all below their all time high.
Here is my logic. For short term buy only extremely high probability set ups. In short term trading why not buy only those who have recently surpassed or just near their all time high. The higher is the probability they will go up because momentum is on your side. When they move they can move more due to supply and demand imbalance as there is little resistance. High probability that when they move the move will last for three to five day. Even if the overall market turns south they are more resilient and your probability of whipsaw is low.
 
I could not prove on daily data since 1984 that days following narrow range or iniside bars or combinations of the two have unusual trendiness, range or direction. it sounds like unproved rumor to me - or i did not ge it right.


peace
 
Quote from easyguru:

AMAT, BRCM, AAPL, BGEN all below their all time high.
Here is my logic. For short term buy only extremely high probability set ups. In short term trading why not buy only those who have recently surpassed or just near their all time high. The higher is the probability they will go up because momentum is on your side. When they move they can move more due to supply and demand imbalance as there is little resistance. High probability that when they move the move will last for three to five day. Even if the overall market turns south they are more resilient and your probability of whipsaw is low.
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Nice.
 
Quote from man:

I could not prove on daily data since 1984 that days following narrow range or iniside bars or combinations of the two have unusual trendiness, range or direction. it sounds like unproved rumor to me - or i did not get it right?
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Look at profit opportunity vs the things mentioned in your post. When the first extreme was taken out, how far did it run by the end of the day, at the close, the first 5 minutes, the first hour?

Or what can I say about days following narrow range and/or inside days that open and trade only in one direction and take out an extreme from the previous day? Or open and trade near to a previous extreme, reverse and trade back across the open and take out the opposite extreme? And is then the distance between the open and the extreme that held an appropriate value...

If you believe in the premise that volatility waxes and wanes, then the inside day, the narrow range N day, and the combination thereof, are manifestations of that premise.

And one more thing.... you just don't see that many outside days. Given that concept alone, one can see how trading the break of an extreme, whether an inside day or NR day can lead to a nice profit opportunity.
 
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