By: Nick Pirraglia with expert input from Tristan Jeanneault of www.t2trading.com
When I have a plan, I always try to back up my thoughts and rules with an expert.
The other day I was thinking about the action in the markets once the Cyprus news flowed with increased volatility in the futures. The S&P futures move in a shorter and shorter time frame as electronic trading and algo based order flow manipulators keep ranges set to their priorities. Then they can go crazy with range expansion. So long as portfolio selling does not lean of the markets, we see the ranges expand and contract daily as the news du-jour plays the most important role and the media tries to make a point to catch what’s moving the markets. My idea was to take advantage of range expansion under selling. But when?
I like is to watch the over – night trading in the futures to help with key levels and potential direction the next day or over a few days as ranges close upon themselves that may generate selling or buying based on key prices that are touched in the over- night trading. This sets up a “scenario” to work with as opposed to having an opinion in the markets. Add collaboration with top experts and you now have a solid plan of attack based on events and rules that you scripted out to trade and take action on.
The next step was to seek some experts in the futures to solidify my plan so I turned to Tristan Jeanneault of www.t2ctrading.com.
Here is a short piece of Tristan’s thoughts I want to share:
“I still think surprises are to the upside, too many people still shorting because the “market can’t go any higher”. I still see ES 1530 as strong support on the daily chart. Seeing typical slow grind up in to FOMC this aft. I think we are still seeing signs of accumulation on the last 2 daily bars of the ES, buying still going on at the dips. I think that since the Cyprus news was shrugged off the FOMC will have a muted reaction, but we will wait and see. On a humorous note Mila Kunis the actress went public that she has started to buy stocks…… if market excitement is so great that she is buying stock the correction shouldn’t be too far away.”
Now I have a better understanding to implement my plan.
For example: (Lets look at the chart below) The other day I was thinking if the e-mini futures were to trade in the over-night session down to 1525, and by 6 am trading under this level, we would see selling into bounces. Even in front of the FOMC meeting. But the futures failed to even break down under the lows of 1530 posted around 2 am on 3/18. So my thoughts of additional selling never happened. I would not get too bearish since my rules never came into the markets as supporting factors to get short. Then we saw a huge bounce from 1530 to 1552+. The next range was 1532 mid day on the 19th and a range high of 1555+ yesterday with the FOMC meetings and Cyprus news going back and forth. So shorting as a day to swing for cash flow was in order only at range highs and not aggressive breaks lower like I originally thought.
The point here is to collaborate with experts in their field when you want to take additional risk. The good news is that Tristan will be a part of the TradersThinkTank guest’s posts and his knowledge will be a huge help to those traders looking to help with their trading plans and strategies.
Check out http://www.t2ctrading.com when you have the time.