Thursday, November 19, 2009

Thursday Notes - Today's Trade & Tax Update

Trader Transaction Tax Update - Well, it's back on the front burner again: The dreaded and ridiculous trader transaction tax, which if passed, would quickly shift traders to non-U.S. markets and generally kill liquidity.

It's been the topic of multiple emails and blogs throughout the day, and since others can do a far better job discussing it than I can, I'll spare the details and simply provide a few key links:

This week's Green & Company Update (with several key links)
This week's "The Hill" Update
Today's ZeroHedge Update
My initial February 2009 blog entry & follow-up entry

Today's Trade - In terms of today's trade, the explosive first-hour volume said it all, and like Monday's opening surge, I felt we'd have only one or two shots at a premium pullback short entry leveraging off the 5 & 15 minute timeframes, respectively, which is pretty much what occured.

Here are my excerpts from the morning portion of today's tank effort. As was the case last time I posted this, key forward-looking bias comments are in bold red, and you can find Jellie acronym explanations both in the 11/5 transcript post and the dictionary post.

09:36:54 {DonM} 5 min shorts may be good later in day
09:36:56 {DonM} based on the open
09:39:14 {DonM} STRONG volume at open
09:39:17 {DonM} strongest in a long time
09:39:27 {DonM} look at that volume bar
09:41:36 {DonM} 1 min td
09:44:23 {DonM} L
09:44:24 {DonM} LOD stop
09:44:35 {DonM} tick air
09:45:32 {DonM} wow
09:46:19 {DonM} volume a clue
09:46:57 {DonM} needless to say I took first pop toward zero and scr'd the rest
09:46:58 {DonM} fast
09:47:13 {DonM} 5 min definitely in play
09:47:17 {DonM} 1100 definitely in play
09:47:20 {DonM} maybe even 15
09:47:23 {DonM} should be a decent day
09:47:42 {DonM} anyone buying the close getting hammered
09:47:50 {DonM} and it ended in a bullish formation
09:48:31 {DonM} remember news at 10
09:48:35 {DonM} should be fun
09:49:29 {DonM} another td last 1 min drop
09:49:42 {DonM} positive tick shorts may be viable later
09:50:53 {DonM} volume continues
09:52:48 {DonM} lots of channels broken on the open
09:52:51 {DonM} i.e. 120 min
09:53:25 {DonM} NEWS ALERT! 7 minutes
09:54:37 {DonM} L 8825
09:54:50 {DonM} looking for covering before news
09:54:52 {DonM} td
09:55:02 {DonM} +1
09:55:24 {DonM} +1.5
09:55:34 {DonM} one more
09:55:35 {DonM} +1.75
09:55:36 {DonM} +2.00
09:55:37 {DonM} flat
09:55:58 {DonM} mini capitulation
09:56:37 {DonM} that volume was a huge tip-off
09:56:40 {DonM} right off the open
09:57:18 {DonM} wonder what Beaks knows
09:57:29 {DonM} hold onto your hat with the 10am data
09:57:36 {DonM} SOOT
09:58:06 {DonM} as always, contra trend traders have to be nimble
09:58:09 {DonM} and execute sharply
09:58:22 {DonM} if it's not your bag, wait for the latter day pbs
09:58:50 {DonM} flat and SOH as we approach news
09:59:41 {DonM} NEWS ALERT! pending
10:00:36 {DonM} lot of air
10:00:48 {DonM} but
10:00:50 {DonM} but
10:00:50 {DonM} but
10:00:59 {DonM} biased toward shorting pbs

10:01:07 {DonM} reminds me of last week
10:01:10 {DonM} on the major move up
10:01:13 {DonM} limited pbs
10:01:17 {DonM} said we might only have one shot

10:01:19 {DonM} ditto today in reverse
10:01:43 {DonM} assume news was in line
10:01:48 {DonM} curious though
10:01:50 {DonM} ...
10:02:02 {DonM} hmmmmmm
10:02:13 {DonM} Phily Fed blew away estimates
10:02:16 {DonM} and we dropped
10:02:24 {DonM} wow
10:02:37 {DonM} think the party is over
10:02:40 {DonM} ok
10:02:48 {DonM} what levels to short gang??
10:02:53 {DonM} what do we see?
10:02:59 {DonM} longs on air?
10:03:00 {DonM} short pbs?
10:03:02 {DonM} levels?
10:03:40 {DonM} I also assume we're at new level to range
10:03:50 {DonM} upper end of range will be in line with downtrend supports
10:03:55 {DonM} lower end of range divergences, etc
10:04:02 {DonM} now that price has adjusted
10:04:17 {DonM} yea, I was hanging at the 1094s in case data popped us
10:05:01 {DonM} tough given the large opening bars
10:05:16 {DonM} btw the SAFEST way to play that open
10:05:20 {DonM} if you were long biased
10:05:23 {DonM} which I always am
10:05:28 {DonM} (fading the overnight move)
10:05:30 {DonM} is as I've said
10:05:32 {DonM} look for a coil
10:05:40 {DonM} and THEN take a break of an early tight range
10:05:55 {DonM} easy stop if the range breaks the other way
10:07:55 {DonM} time may have to do its thing
10:07:57 {DonM} on pullbacks

10:08:13 {DonM} in about 30 mins, 5 min 15MA should be around 1095
10:08:20 {DonM} eyeballing
10:09:49 {DonM} 5 min 3lb bp is 1095
10:09:59 {DonM} will keep eye on that
10:10:01 {DonM} given the trend start
10:11:47 {DonM} but want to see it today in case we begin wiggling around 1093-1095
10:11:51 {DonM} and I can keep a cool head
10:12:37 {DonM} obviously mkt moved a great extent in a short period of time
10:12:41 {DonM} time has to do its thing now
10:13:00 {DonM} would love to nail the top of the bear flag
10:14:28 {DonM} SOH until I get a price I like
10:14:34 {DonM} I hate shallow pbs as you all know
10:14:38 {DonM} but might be what we get

10:15:44 {DonM} toppy stochs
10:16:35 {DonM} congested area here
10:17:33 {DonM} putting in an order for a pb to 5 min with td, toppy stochs, and a 1 min 3lb turn
10:17:45 {DonM} with a cherry
10:19:49 {DonM} stochs were a good indicator
10:19:55 {DonM} now that we're in new range
10:25:18 {DonM} watch tick next move up
10:27:02 {DonM} S 9225
10:27:20 {DonM} should drop
10:27:56 {DonM} 5 min premise
10:28:00 {DonM} will also short further pop hard
10:28:05 {DonM} +1
10:29:03 {DonM} expecting 9000s
10:29:28 {DonM} still want to read tick on any further pop
10:29:34 {DonM} but trading what I have
10:29:37 {DonM} in case that was it
10:29:48 {DonM} sitting at 9075
10:30:09 {DonM} fills on asks TOUGH
10:30:30 {DonM} no way this won't fill
10:30:32 {DonM} lol
10:31:08 {DonM} would be shocked

10:31:52 {DonM} +1.5
10:32:19 {DonM} +2
10:32:20 {DonM} flat
10:33:05 {DonM} 5 min 15MA about where I expected at 10:30
10:33:14 {DonM} 1094ish with SHARP angle
10:33:33 {DonM} we didn't get TICK div
10:33:48 {DonM} but as I said earlier, ANY positive tick reading likely good short
10:34:12 {DonM} 09:49:42 {DonM} positive tick shorts may be viable later
10:34:21 {DonM} name of game is knowing what to look for

10:34:24 {DonM} given the conditions
10:34:25 {DonM} adapt
10:34:33 {DonM} any td I would have been HEAVY
10:34:38 {DonM} but I took what was there
10:35:22 {DonM} yea, had to get SOMETHING on
10:35:28 {DonM} no excuse will scaling principle
10:35:30 {DonM} worst case
10:35:34 {DonM} you make a LITTLE money
10:35:38 {DonM} I can live with that
10:35:41 {DonM} as I wait for the outlier
10:36:07 {DonM} tds would have been ideal
10:36:11 {DonM} but the selling has been strong
10:36:13 {DonM} and you know
10:36:20 {DonM} that many will bail at ANY chance to get out
10:36:27 {DonM} those Ls who were stuck
10:36:34 {DonM} and thus why this works
10:37:07 {DonM} still like any deep retracement
10:37:09 {DonM} for Short
10:38:17 {DonM} we actually DID have stoch div
10:38:19 {DonM} on range chart
10:41:12 {DonM} yea, a lot of things happened at that open
10:41:15 {DonM} 1100 lost
10:41:18 {DonM} globex low lost
10:41:21 {DonM} 120 support lost
10:41:22 {DonM} volume
10:41:23 {DonM} etc
10:41:57 {DonM} again, I can't stress enough
10:42:00 {DonM} IF you want to fade gaps
10:42:07 {DonM} which I bias toward all the time
10:42:23 {DonM} using an initial tight range or hard stop on low
10:42:26 {DonM} ideal
10:42:31 {DonM} to keep you in SOOT
10:42:37 {DonM} I was long at the open
10:42:46 {DonM} and got long a few times
10:42:54 {DonM} but when the range gave way
10:43:00 {DonM} ALL premise was lost
10:43:24 {DonM} you can see when I stopped the fishing expedition
10:43:35 {DonM} and saved a 6 point headache
10:44:20 {DonM} just inbred
10:44:29 {DonM} I know I can ALWAYS get right back in
10:44:34 {DonM} remember that webinar slide
10:44:37 {DonM} of my sequences
10:44:43 {DonM} where I had to reenter at HIGHER price
10:44:55 {DonM} today is why!
10:45:04 {DonM} yes, and I was crazy bullish again today
10:47:21 {DonM} I'm always siding with the fade
10:47:24 {DonM} ALWAYS
10:47:30 {DonM} 70%+ probability
10:47:35 {DonM} guestimate
10:47:44 {DonM} whatever the real #
10:47:54 {DonM} suffice it to say the TENDENCY is to reverse
10:48:02 {DonM} as you open in wholesale conditions
10:48:34 {DonM} I was actually tighter with today's stop
10:48:37 {DonM} than I was on that one
10:49:03 {DonM} when ticks didn't hold
10:49:14 {DonM} I scidaddled
10:49:47 {DonM} all upticks being met with selling
10:50:20 {DonM} note how ALL positive ticks
10:50:24 {DonM} been sold
10:51:20 {DonM} I'm not shorting all of these
10:51:26 {DonM} but at least I know what I'm NOT doing
10:51:31 {DonM} and that's half the battle
10:51:33 {DonM} defense
10:52:15 {DonM} I got my one decent trade
10:52:18 {DonM} ok with that
10:52:46 {DonM} there's always Friday MATD if this trends all day
10:56:49 {DonM} already liking tomorrow's trade
10:56:57 {DonM} regardless of what happens rest of day

10:57:04 {DonM} several key levels
10:58:04 {DonM} some news from Tradestion on my inquiry
10:58:08 {DonM} re: Eurex
10:58:13 {DonM} To All Eurex Data Subscribers,
This week, Eurex began sending synthetic trades that are resulting in data spikes. We are in the process of modifying the code to eliminate these synthetic trades. This issue is of the highest priority and we are working to resolve it ASAP. Reinaldo TradeStation Securities, Inc.
11:03:11 {DonM} next push down will be #3 on 5 min
11:03:14 {DonM} if it occurs
11:03:39 {DonM} air on 15, 30, 60
11:03:41 {DonM} tough place
11:04:04 {DonM} enough stuck longs for another push?
11:06:45 {DonM} VIX suggests possible new leg

11:10:38 {DonM} been SOH here
11:10:42 {DonM} just watching
11:10:45 {DonM} got my one trade
11:10:47 {DonM} trade
11:10:58 {DonM} waiting for more obvious capitulation
11:11:04 {DonM} or sharper pb
11:11:04 {DonM} now
11:11:09 {DonM} will let rest go without me