SPX and Crypto Fun!

Hello everyone! I have a few updates. As many of you know, I’ve been working on Stockbot over the past few months trying to get a system out that will allow you all to easily follow along with the same trades and strategies. That’s been going great. Things have picked up steam over the past 2 months. I took on another developer and we’re on track for a late January release. If all goes well, I’ll be putting a ‘beta’ invite message out here.

Now to market stuff..

As I said last update, my target for the SPX was 2500s. I continue to hold that view, though I am keeping a watchful eye ever since we tagged 2580s on 12/10. I don’t believe that was the final decline but smart trading is not about beliefs. 

SPX has clearly been trading within a roughly 200pt range and the price is threatening to fall out of that range. I’m watching for a follow through in either direction. The expected price action can be as much as 200pts+-. For me, this is a fine place to take a position (bull or bear) with an appropriate stop. As long as we’re in this chop zone, it’ll be difficult planning longer-term moves. 

Speaking plainly, we know we’re in the era of Quantitative Tightening. I spoke about this in a Jan/Feb post. As a result, we know that the Fed is now extracting from the market and unless companies are posting strong numbers, the momentum will continue to be towards the downside. We can’t discount a bounce with a short squeeze, but at the time, the longer term factors favor a bearish outlook. 

My “Volatility Monster” and Wave M strategies each took shorts positions yesterday and this evening but they are trading relatively short-term (hourly strategies). Both have done well during that past choppy months but each are.. choppy by design, so I hesitate to post their entries and exits here. When stockbot goes live, you can simply subscribe to either algo, look at the trade history and max drawdown, and decide if you want to take the trade. 

Which brings me to Crypto…

Yesterday I was looking at whether some of my older, unpublished strategies from TradingView could be migrated to Stockbot. In the past, I had abandoned these for one reason or another mostly because they did not work in certain asset classes or time-frames. I started testing my old Wave Momentum strategy (invite-only https://www.tradingview.com/script/qKrwwX4L-Wave-Momentum-Strategy/)  and by chance looked at Bitcoin. The results were nothing short of astonishing. 

Across nearly every time-frame, the strategy does fantastic on Crypto currency. In the image below, the chart in blue is the profit over the year, the average trade bringing in 600 bucks for a total of 163k profit. 

Over the next few weeks I’ll be doing some analysis on exactly _why_ it’s performing well. I have always had the suspicion that my volatility and momentum algorithms would work particularly well in crypto-markets because they’re not as heavily influenced by algorithmic trading systems. 

Anyway, I’ll be talking to readers and others to determine if crypto is something we support at launch, soon after, or not at all. As always, feel free to drop me a message.

-JMX

Stockbot Market Update – 2-27-18

Today’s update is fairly straightforward. With the market taking our bullish path during the last few sessions and capturing our initial 2750 target we see that it has rallied to and bumped up against the former support zone, now resistance zone from the past few years.

If the bulls can re-form and rally through here, we’ll probably see a break through and hopefully a retest to solidify that trend-line.

If bulls cannot break the trend resistance, then as you can see the price has a fair amount of space to move within and the risk is towards the down-side.

Either way, we’re approaching another major decision point for the rally.

 

Stockbot Momentum Trades

Currency Markets

Currency pairs continue to degenerate with the majority of trades being on the SELL side. With RSI reaching near-term bottoms we may see something in the way of a bounce today. I’ll post any larger moves that emerge. On the whole, currencies seem to be distributing in preparation for a new move (up or down). I’m waiting to see momentum and volume give an indication

Agriculture Markets

Soybean Meal (ZM): Rally retraces but is still poised to continue with an hourly BUY at 0700. Best R/R level is around the 381.5/382 support level.

Update: This EXPLODED upward moments after I posted this from right at the 382 level. Looks to see if that momentum continues. Taking some off if not.

Soybean OIl (ZL): 15m BUY at 1130.  Going against the trend is tricky so place stops accordingly. Bullish momentum energy is coming in after the RSI bounce.

Exploded upwards. Taking some profits here.

Energy

Crude Oil (CL/QM): 15m BUY at 0900. Watch the long pole. These have a tendency to revert quickly on you if they do.

Update 1335: After this morning’s fake-out, another 15m signal has triggered. Remember, these are meant to be traded short-term. With stops under the prevailing trend-line (which is typically not more than 1-2 candles away from the entry signal).

Update 1354: Popped out on trend break. That’s the problem with trying to play long-only during a down-trend. Fortunately, these a small trades (since they’re high risk)

Natural Gas (NG): Missed posting this this morning but just noticed that the 15m Momentum formed with the 1H momentum forming an even more bullish signal if it can break the highs here the daily signal is on the verge of forming and would potentially mean a rally towards 2.8

Metals

Copper (HG): 15m BUY at 1215 –  this one is high risk due to the counter-trend nature.

Update 1330: Gold and Silver seem to be following Copper’s lead in this intra-day rally off the lows. We’ll see if it holds well enough to form a larger momentum signal.

Interest Rates

2y/10yr: 15m and 1h BUY signals this morning at 0800.

Crypto

Bitcoin (BTC):  A rare 1D BUY from 2/23 continues. While breaking down over the near-term, 1H BUY is still strong from 2/26 Hong Kong Markets open. If participation continues the next target is 11200 then 1200, then 1400. With the rally’s support zone so close (10590), it’s a decent risk reward area. I’d want to get a fresh 15m signal to indicate that bullish momentum is continuing. We’ll get one if the Daily chart is indeed going to resolve bullishly. For now, waiting.

1030: Bitcoin broke below support line. Still waiting on 15m to give a recovery signal. Otherwise it’ll get ugly.

1100: BTC hourly momentum breaks down below support level. The rally as a whole begins to look in serious trouble if bulls can find dip buyers (which cause the momentum extension waves we see sometimes at this point).

Indices

ES/SPX: Momentum is mixed this morning with the overnight decline sapping a lot of the positive hourly momentum. With the declining volume we may be in for a bit of a struggle to break back into the support zone I showed on the chart earlier.

That being said, there was a 15m BUY that was triggered at 0720 so this is a high risk BUY for the moment but I’d play it carefully. Volatility makes this a higher risk trading session for momentum traders.

15m may be breaking down. Volatility at this interval will not be kind to traders over the short-term. Today you’ll have to be careful about your entries as thus far the market is swinging widly within a 10pt channel slowly grinding upward.

I don’t have the highest confidence in this open. If you can pickup an entry near 2776/2777 then your risk/reward is maximized. 2778 is also low(ish) risk. Our trend-line is in the 2776.75 area.

Update 1000: Bulls will have to recover it here in order for this decline to not become impulsive.

Stockbot CLOSED its 15m long (at 0945 momentum breakdown). Time will tell if that was just being safe or ultimately wise. Bulls are trying to build support at the 2777 to 2780 level.

I’m going to review other opportunities to trade this morning where volatility is a little more manageable.

Update 1008: I took a look at the new RSI Trend Cycle indicator I posted a few days back and noticed a pattern similar to the 2/12-2/13 timeframe. The market melted up during 1-2 sessions of very low RSI cyclic momentum then suddenly bursts forward higher.

Looks like the volatility faked-out Stockbot this morning. It was listed as a ‘High Risk Long’. It looks like what I typed one paragraph earlier may have played out on the near-term. We’ll see if the short-covering + bulls can finally get some decent momentum going. SPX 1H momentum remains unchanged thus far (likely due to the choppiness).

I’m always wary of parabolic moves. It does look like some trending is returning at lower intervals. A close at the top of this range (above 2784 on the 15m chart) will likely point higher.

Took some profit at 2789 (from the new 2784 entry I mentioned a moment ago). Waiting to see if we can break back into the trend channel or if we’ll fall back into the bull channel.

Update 1034: This is one of those days where the market will frustrate both bulls and bears. It’s best to only take high risk/reward trades near major consolidation zones.

Update 1042: Basically, if you’re not day-trading at the 1m/5m level, then it’s a good day to stand aside as the risk out-weights the reward so long as we’re stuck below 2790. Good long entries are as close to 2777/2776 as you can get. Even these are not “safe” in that the market has much more down-side risk than upside. They’re less risky though since you can place a few point stop and be at lower risk over a major reversal going against you.

Update 1045: Bulls need to hold that 2777 area or this pattern looks like a major bearish reversal.

Update and break: 2773 is a key reversal level so it’s another risk/reward level that slightly favors bulls. Taking a small stab to see if it holds, with a tight stop.

Also, I guess Stockbot wasn’t being premature when it closed at 2784 due to “high risk”.

Update 1240: Bullish Reversal Early warning occurred at 1230. Stockbot took a 5m BUY long. This is high risk since we’re in the midst of a bearish movment. If price can hold then we may see another recover rally. Bulls are toying with breaking this recent bearish channel. Otherwise, this is another blip in a bearish movement. Currently volume is a toss up. We’d like to see this build over the next 5-10mins.

Dumped half the long during the 1m ramp up to 2772. I may dump the rest here (from the stockbot Early Warning above) if price action and volume don’t start coming in.

 

On another note: Instead of ONLY posting BUY Stockbot Entries, I think I will also post the SELL entries. I find that most people have an easier time being long, so I don’t usually post the sell side triggers. There are some markets that can only safely be traded on the SELL side (for instance interest rates, and metals for months).

Trade Safe

JMX

 

Stockbot Market Update – 2-23-18 (includes cryptocurrency)

I found myself torn when crafting this update. It has taken me many many years to realize that I have a naturally bearish personality. I don’t take heavy risks on trades, I make much more money short, and I am naturally defensive and protective of both financial and other assets.

Realizing this about myself has helped me to be able to step back and look at the broader picture. When everyone is shouting “the world is ending” sometimes it’s best to step back and look at the opposing views. Sometimes though, something bad really is on the horizon and it’s best to avoid it.

The Bullish Case

Yesterday I took another look at my Heaven and Hell chart and still could not resolve the last two months of market data with the long history of crashes and corrections. As I said during my initial look, that may be because the recent parabolic data has acted to skew both market prices and any signals that might be analyzed. At this point, as hard as it is to believe, the market barely looks corrective. Momentum, while bearish, isn’t any worse than previous corrections. The simplest read is.. this lack of any serious warning signs points to more upside.

I look at it like this, everyone can’t be right. Market crashes are long-tail events. If the majority of bearish traders on something like StockTwits are holding large amounts of puts and sentiment is bearish, the market isn’t going to make them all millionaires.

The bullish case points to perhaps 1-2 more decline days but ultimately a breakneck multi-day rally back up to SPX 2800+. This would both purge the bears and trap the bulls. In classic market topping action, the price would surge and then fail to find new entrants causing a panic and a final route (for this cycle). Ultimately dropping to perhaps SPX 2200 but I’d need to do analysis at that time.

The Bearish Case

Both cases are essentially bearish in that they ultimately resolve downward but I see the bearish case as taking a more direct route. In this case, we see the Fed’s recent Quantitative Tightening as a triggering event. With liquidity drying up (note it returned mostly this week), and the Fed selling 10-50 billion worth of assets into the market, the ‘bounce’ that everyone is expecting becomes the event that never happens. The market instead fails directly from it’s current level. In some ways, the present price action somewhat supports this. From peak to trough, the months prices have created a triangle which points to a sudden market pivot on the near horizon (drew it on the chart).

That pivot might only drop the market to recent lows (2540) before recovering but that would be another decision point. It could also turn more directly bearish, in which case it would point to a crash much more than a correction.

With all of the EW technicians pointing to this as either a Wave 3 ‘correction’ (absurd) or a Wave 4 decline – the real truth could be that it’s simply the end of a long bull run and there won’t be another grand rally to save everyone who was trained to ‘buy the dip’. In my heart I want this to be true, mostly because I’m a bear and nothing annoys me more than lazy “traders”. Ultimately though, it doesn’t matter what I think, I go where the data takes me.

So what do we do?

As you can see, it’s impossible to time and predict the market perfectly. Just as with momentum trading, we’re not trying to guess the future. As a trader, we come up with a hypothesis and we wait for the market to prove us right or wrong by taking one of the paths. There’s still the small risk of a fake-out but we’re trading with stops and safe positioning so a fake-out poses minimal risk.

If the market breaks out towards 2750 as I mentioned last post, that would be the first “checkbox” for the case for “rally to highs (likely 2800-ish)”. As we see this, happening, we get long and take on a little more risk and then trim it as we approach the target. The approach is similar towards the downside. If the market is not proving itself to be bullish, we favor short positions and only go long on low risk trades or smaller position sizes.

For now, I will continue trading near-term momentum data as it becomes available.

 

Stockbot Momentum Trader Updates

Note: These are NOT designed to be held long-term unless a fresh 1D (daily) signal is given.

Update 1058:

Days like today (on the S&P 500) are why you diversify. The indices are grinding  sideways, chopping violently in either direction. Trend traders get killed in markets like these unless they’re trading a very small intervals (1m/5m). I probably won’t be posting any SPX updates since the moves will happen too quickly. I’m trading energy today while I monitor SPX/DJIA. I do have a speculative small short position again the DOW which is a little easier to read and slightly trending downwards.

Incidentally, this sort of price action is indicative of an indecisive market, something you might see at the end of a consolidation zone (triangle) where the market is trying to decide if the prevailing direction will be up or down. It could last for a few sessions. With the weekend coming up, i think we’ll see equal pressure from bulls and bears alike wanting to clear out positions and new bulls and bears entering equally expecting a Recovery Rally or a Black Monday. This is not a position I’d hold over the weekend unless you enjoy playing the lottery or want to gamble with some put/calls.

We’ll see how midday and end-of-day shape up. I expect their to be many fake-outs until a one-side reaches exhaustion.

Indices

SPX/ES: 15m SELL signaled at 0830 but I don’t give pre-market strong-weight. I’m waiting to see what the first hour of trading concludes as. 1H finally ended at 0500 from 2/22 0800. A new 1H BUY signal was triggered at 0700 – volume is not confirming this so it’s a cautious buy at this time. When 1H and 15m conflict like this it’s sometimes better to let the market pick a direction before jumping in.

Update: ES 1H is breaking down which will confirm the 15m read that the rally might be over — if the price closes below 2716 in.. 35mins.

Update: 1110: Needs sustained trade over 2723.50 in order to break out over the chop bullishly. Otherwise it’s just noise. The same is true for 2713. That gives us a massive 10pt range. At this point, the best risk/reward trades would be from either edge of the range (betting on a reversal or betting on an extension).

Stockbock Momentum Trader gave a 15m momentum signal and purchased a High Risk position at 1045 (long). Because of their risk, I don’t recommend these typically.

Update 1128: With this micro bull rally stalled at the same place, I’d favor a return to the lows but momentum is still slightly bullish.

Update 1141: There’s significant resistance at the 2726 level (flag/triangle upper channel). I don’t epect it to break through but it if does we could see a move towards 2728-2730. Obviously, consolidating above 2726 would be bullish. Otherwise, it’s all a prelude to a trip to 2713 and below.

My best guess is that we’ll consolidate into the close leaving the market direction in question (a perfect triangle with higher lows and lower highs).

Update 12:09: Took a tight short from 2729. Nothing indicating this is a good idea but call it (bad?) instinct. Tight stop.

Update 1313: Looks like my instincts were correct. Price dropped out of the rising triangle and broke both 5m and 10m trends, with the 15m momentum looking set to break soon. A trip towards 2713 could be in the cards if/when that happens. If not, the upper breakout from yesterday (2740 is still in play). It’s difficult to tell at this time so I’m playing it moment by moment. The hourly price _really_ looks coiled and ready to break if price drops below 2722 again. We’ll see.

Curiously, Stockbot is still long from its 2720 High risk entry earlier so I’m in effect hedging by taking the other side from 2729 short. I suspect that Stockbot will signal a close of the Long shortly once 15m momentum fades. Points wise, that isn’t the best trade for the algorithm but high volatility days like today don’t generate the best momentum trades (not enough sustained momentum.

If the price bounces from 2722 then Stockbot will have proved me wrong and I’ll end up with a small profit on the short side as well.

Update 1433: Looks like Stockbot was right and the price reversed to hold the 15m Momentum (for the moment).

Price action is consolidating upward but stalling at the day’s high. That really leaves things at an important pivot. Being able to close above the flag would leave things marginally favoring the bulls (north of 2726).

Final Update 1445: 15m Momentum Signal has continued to be the most reliable signal generated for volatile indices trading. When paired with a trend exit (instead of a momentum exit), it’s been a work-horse. I’m taking off for the day Stockbot Momentum Trader is still Long from this morning’s update. My short was stopped out for a small profit. I’m guessing the price will aim to fill yesterday’s gap. In any case, Stockbot’s 15m profit as of now is right at 10pts per contract. With stops being raised for every high momentum move up.

FYI: as stated yesterday 2740 would be the pivot zone to watch. That doesn’t mean the price will make it that high, but if it does, that’s a zone to watch for a potential reversal. There’s enough time left in the session for an end-of-day decline from that level. That being said, there’s enough momentum that we may see end-of-day panic buying from late-comers, haha. Either way, watch your risk as price approaches that level.

Currencies:

Currency trades broke down around midnight last night but were great for the day session (using yesterday’s update)

Commodities:

Yesterday’s trades rallied well and broke down on open this morning. I’ll post new entries as they appear. Live Cattle was the sole exception which consolidated into a triangle preparing for a larger move.

Lean Hogs (HE) remain in rally mode poised to close the gap to 73 but given the larger breakdown in commodities, it would be smart to take some profits or tighten stops.

Energy:

Natural Gas (NG): 1H BUY signaled at 0900. This one signaled as a ‘high risk buy’ so use appropriate position sizing. I believe it’s because of the relatively low volume and the fact that it’s a counter-trend entry.

Update 1300: The NG long play worked out well. Continuing to ride it as it breaks out from monthly lows. Moved stops up to protect gains at trend-line.

Update 1330: NG looks to be forming an extension wave at the 5m level. If it holds we’ll see prices spike again. These extensions have a tendency to end suddenly, so I’ll be moving stops up a bit based on price action.

Light Crude Oil (CL/QM): 15m BUY at 0630. 1H about to signal a BUY if momentum carries over resistance at 62.900.

I think this will be today’s best trade. From an entry just below the trend line, (stockbot’s entry was at 0915 but even if you entered after this post (0945) it was below the trend line). If the price action continues and holds then we may have the start of another daily Oil Bull rally.

Call me a cynic but I think it’s more likely to rally and then correct sharply. I based that mostly on the low buy volume compared to the recent selling. Price movement would have to accelerate into the close. 64.0 will be a deciding point. If the price can reach and retake 64.0 then it might inspire bullish confidence (after some consolidation).

Update 1310: Popped out near the peak at 63.500 after the consolidation broke downward. With the 1/5/10m momentum running negative, I guess my call was correct. There’s still about 5 minutes to bounce and recover the price given that 15m momentum is still positive.

 Metals:

Silver (SI): Weak hourly SELL and 15m SELL at 0830

My SI short continues to run sideways and is making me lose patience. I’ll stay without unless the trendline breaks.

Update 1331: Silver touched low of day and then bounced. I am still short a small amount to see if we can break the low of day and continue the down-trend.

Crypto Currency:

Bitcoin hourly rally began at midnight and seems to be a continuation of the daily rally signal I posted 1-2 weeks ago.

Bitcoin (BTC): Hourly and raily continue. New 15m surge began on Asia markets open this morning. Next target would be a 10400 and eventually a return to 12000 if momentum continues. Right now, sell side pressure is showing it’s head so I can’t speak for the future. Price was rejected on it’s first trip to 12000 right at the top of the near-term crash channel from 20k. Right now Bulls need this current rally to hold or the trip to 6k will be quick. Support level is presently right at 9800 on the daily and 10200 intra-day.

Update 1333: Price failed at the support level I specified in the update. Right looks to be a consolidation forming. If it holds we may see another run up. At this point 10200 becomes strong resistance. Failure to break the now multi-month down-trend would lead to a slide.

Ethereum (ETH): Curiosity or early warning signal? ETH breaks from the rally on the daily at the 1k pivot (top of crash channel). 15m continues to break down. It’s pointing to 600. Is this an early sign of what’s to come if/when BTC fails to break 12000? ETH needs to trade above 950 to reclaim the bullish bounce.

 

Yesterdays Stockbot Results

BUY 2688.75 – SELL 2715.5  for 26.75 pts or  $1335.5 per contract

Note: I have some automated alerts that go off during Asia market’s open which allow me to buy in early if momentum is building. If you were only to trade during daytime hours (let’s say from 0800 to 1600 like a normal job) the results would be:

BUY 2706- SELL 2715.5 for 9.5 pts or $473 per contract

 

 

This morning’s update took me longer to prepare than I anticipated. I’ll be posting 15m and 1h trade events in just a bit.

Trade Safe

-JMX

 

 

Alphastorms Stockbot Market Update 2-22-18

Live updates on SPX day-trades are at the bottom of this page.

Stockbot Momentum Trader Updates (0845)

Currencies

Looks like currencies are set to break their daily losing streak and begin fresh rallies if momentum can continue into the open. Most currencies moved on asia markets open. At this point, they’re more suitable for swing trades. I’ll updates these later in the day if I see fresh entries.

Swiss Franc (S61): 1H BUY at 0300 with an extension triggering at 0815. Extensions have a tendency to end suddenly after they’ve run up so be careful here.

New Zealand Dollar/Yen (M61/J71/J61): 1H BUY at 0300. Continuation triggered at 0815

Euro Futures (E7/E6): 1H buy at 0300 with bounce at 0815. Ideally we’d want a move above 1.23269 to further confirm. If so, we may be at the beginning of a bounce day.

Commodities

Wheat (ZW): Looks set to extend if it can break above 460’4. 1H BUY at 0200 with a 15m Extension coming in at 0815

Lean Hogs (HE): Momentum trade from 2/20 provides a potential entry close yesterday. I will update this when the markets are open and if Stockbot triggers a 15m momentum event. Right now it’s looking likely. Overall though, this is a short-term trade (like all of the updates above).

Energy and Metals

Crude (CL/QM): Crude is leading the charge this morning with a rally beginning at 0300 and not quitting. This is a very strong momentum rally but unfrotunately if we weren’t in it on the first or second trigger (2/21 22:15 or 2/22 0300) then the risk becomes difficult to assess. I may take a piece on a decent pullback or if Stockbot posts a continuation pattern. Also note that crude is overall trending negative which would mean that this is not a position to jump into late stage (sudden drop). Crude is also hitting near-term RSI limits so the risk/reward is also substantially worse unless there’s a pullback.

Update 1232: CL/QM Broke back above a long-term bullish trend-line with 15/1h momentum. If this price holds above, Oil may very well have stopped it’s downturn. That’s a very strong “IF”. For now, we’ll play the momentum trades.

Metals: As a whole, metals and energy began a global rally at 0300. If they sustain this then perhaps we’ll see a reversal of the longer-term downtrends. For now, I’m awaiting entries.

 

Crypto Currency

Bitcoin (BTC): Crypto has entered another bear cycle starting at 0400 (coincidentally when global markets began rallying). With volume solidly bearish and momentum negative, Bulls will have to hope that these bottom RSI levels might lead to some bounces. On the whole Bitcoin is still on a bullish DAILY cycle until it closes below 9848 (today) or 10000 (tomorrow). Either would solidly break out of the multi-day bullish rally channel it was in.

As a day-trader, this is solid risk reward level in the 9800-10000 range. BTC is sitting right on it’s daily trend line. IF it holds, I’d expect to see higher prices tomorrow to confirm our theory. This is NOT a Stockbot Momentum Trade entry, more of an old school risk/reward trader entry. Stop should be place just below the day’s low (which might already be too far by the time I hit POST on this..).

Indices

Equity markets began their rally yesterday afternoon with this morning finally triggering a stronger Stockbot Momentum 1H BUY signal.

SPX/ES:  1H BUY at 0300. As usual, I prefer to get an entry that occurs DURING market hours. There’s a tendency for markets to rapidly change direction on open if the move was a counter-trend move. This was a counter-trend move. While I took a speculative position overnight, I will be watching the open before deciding to add or close my position.

 

Update: 0924

Yesterday’s market action continued with the down-trend began on the 2/16. The price rallied hard into the Fed minutes meeting, signalling bullish before pivoting and plummeting back into the channel right after. This is a classic “Fed Fakeout”. Prices recovered last night and we look to be in the midst of another potential intra-day rally. Rather than speculate, we’ll like the price action at open (and shortly after) dictate where things are going to go. The channel support and resistance zones will be key areas to watch.

If bulls can hold this area, we have a decent chance at rallying all the way back to the SPX 2740-2750 area, retesting the near-term highs. Of course, we’d have to break out of this crash channel convincingly.

If the channel fails again, I fear we will be in for a return to the weekly lows (around 2540) before another decision point.

Structurally, this wave is mirroring the mania pattern we saw in BTC and other parabolic markets. I think there’s a fair bit more to come if this correction begins morphing into a crash. That’s all speculation at this point but bear in mind that the FED is in the middle of Quantitative Tightening. The mass deleveraging and selling of 10-50billion in assets into a rising rates environment certainly doesn’t sound bullish.

Update 0938: next hurdle is 2720 with 2716 being the perfect entry (very short-term). I took some profits and got better entries at 2716.25

Remember 2740-2750 is a pivot zone (if we even get there). It’s a place where the market can often dramatically change direction (i.e., right after the opening rally).

Update 0944: Bulls need to recover here if the morning rally is to continue. Waves of selling pressure are coming in. Flat at the moment until I see better market action. May be some entries once price reaches short-term trend lines (near 2712-2714, lower end is 2709 for the overall 15m uptrend). I’m waiting for volume to indicate bulls are in control again, or for a Stockbot Momentum Signal.

Update 1003: From a bullish perspective, the 2709 area is a great long entry as it’s resting right on the trend line. 2708 is even better but I doubt we’ll see that again if the trend is continuing. Right now volume is mixed. My Early Reversal warning signaled a potential move from bearish to bullish at the 1m level.

Update 1020: Early Reversal signal worked perfectly and profitably. Overall trend from this morning is intact but at risk of breaking down. Ideally we’d want to see some confirmation of this 1m rally at the 5m/10m momentum levels. Thus far, I haven’t received any signals from Stockbot so I’m trading lower-scale (1m) signals for small scalps (1-2pts vs 10+pts).

Update 1051: Took some profits  from the Early Reversal Trade. 5m and 10 seem to be recovering and going in-line with the near-term trend which would indicate a choppy grind up towards our 2740-2750 goal.

Hugging this trend line at 2718. This is a great bull entry, with a stop just below 2718. Target would be 2723 for a great R/R trade. I took a small position here. No momentum signals yet (at the 1m level). Stopped out. Waiting for a valid signal. That’s what I get for front-running 😉

Stepping away. For now, the larger trend remains bullish. I’ll probably look a daytrades again after lunch. For the moment, the volatility is so great that momentum barely accumulates in a 1minute time-frame. For the mid-term trades from this morning the areas to watch are the support and resistance lines which have now been tested maybe 6 times.

This is looking to either be a bullnest or an ending diagonal. A bullnest would target the zone we talked about earlier. An ending diagonal would drop lower. We should know here quickly since the price is consolidating at the 1minute level (see below).

There’s a large amount of bullish volume building and bullish momentum bias. So my bias is towards the upside. That being said, trade carefully.

Off to lunch. Remember, there’s always another trade that can be taken.

Update 1129: despite the market taking the bullish path above, it needs to take and retest that trend -line (currently at 2726.5 in order for a bullish base to be formed and this to confirm as a bull-nest.

Update 1135: 2721 trend-line area is a good r/r if you were watching. The ascending price channel shown above was tagged and pivoted.

Also note that for day-trade purposes, you should only hold these trades until they’ve broken the support level of your entry, or until you’ve hit your price target. In general, I try not to hold short-term trades for more than a cycle (momentum cycle). Otherwise, it’s no longer a short-term trade. For instance, when I day-trade a 1minute chart I’m cycling out of positions when trend’s change, which happens naturally every 5-10 minutes. In general I find that I can only hold at the 5m and above interval if trading is relatively calm and 15m/1h otherwise.

Update 1145: Looks like we will be happily bouncing up the ascending channel. Perhaps I have gotten used to the 20-40pt moves from earlier in the week since this feels like a slow day. From a pricing perspective it’s been fairly predictable forming ‘bull nest’ like patterns over and over. I think the risk is that the price could suddenly fail to the down-side. If SPX can form a base above the rising channel then we have a real chance to have this bull-nest actually break away.

Update 12:11: further accumulation in the price movment but I’m out of short-term positions for a bit. 2727 looks like a decent short-term entry but there’s no real support until 2725 or so. I don’t like this flaky price action.

Update 1235: Looks like my concerns were realized. Price broke down after failing to hold upwards momentum. Now prices are testing the 2723 level.

Update 1307: Price continues to consolidate to a tip of a triangle. Price is holding under uptrend and within crash channel from the week. At the moment, be ready for anything. A break to the downside risks being as bad as yesterday’s end of day plummet. A break above would send prices soaring and help confirm a rally continuation.

Update 1318:  Taking the short side at 2720 has been a great trade so far.

Update 1331: Market is weak under 2720-2718. Right now I’m seeing another bout of selling after the RSI related bounce at 1315.

Update 1357: Bullish momentum picking up and cross-over crash channel from  noon high. If price can hold above 2714, short-term cautiously bullish. If price fails, we’ll see a trip back below 2710. Decent r/r zone.

Update (1417): Looks like the break of the trend-line (a good short r/r) is turning out to be a continuation or a near-term stop.

Update (1431): Stockbot Momentum Trader gives a 5m BUY signal. This is a very short-term signal. Failure of the stop (2717.75 means the opposite is likely).

Update 1450: Well how’s that for some wave symmetry! This pop and drop at 1400 is a mirror image of the pop and drop this morning. I don’t personally use symmetry to trade but it is interesting to watch in action and sometimes an indicator of an ‘end of trend’.

At this point I’m going to step away for a bit. I prefer not to over-trade if I can help it. Today’s “longer term” (15m/1h) turned out to be very successful capturing 35pts before being knocked out of the trend. Near-term trades have done well too but the market’s a bit to volatile to grant too many great risk/reward trades at the 1minute level.

Near-term the bias (5m and beyond) is still negative. For the purposes of maximizing risk/reward, I tend to only enter new trades when a new momentum cycle has begun. Being that I’ve exited my shorts (perhaps prematurely), I’m on the sidelines until I get a new Stockbot Momentum Trader event.

With the market kind of putzing around at this level today, toying with the upper boundary of the crash channel, I don’t have any long-term re-assessments.

Downward target of the crash channel remains 2540 with a good potential for a bullish counter-trend rally to 2750 and beyond.

Ultimately, market momentum looks to be resolving itself to the downside (over the longer term). This would lead to another clipping of the indices.

Update 1500:  Heading into the final hour of trading momentum is uniformly bearish. We’ll see if bulls can pull a trick out of their hat. Breaking the low (2707 or so) and trading under would be bearish for the trend overall.

I jumped back in for a short after my long signal failed at 2717. In an old trading book by Gann from the 1920s or something I remember reading that one of the surest indicators is when your strategy fails decisively. I’ve found that this tends to be the case more often than not (except in cases where the trade failed because of slippage or poor exit). In this case, when the 5m BUY failed at 2717, it became a contrarian indication of what was to come. I get the feeling this one trade will make the entire boring day worth it.

update 1515: I think this will be my last update. The short from 2717 worked perfectly for an big gain. Market momentum is still solidly negative. Bulls need sustained trade over 2707 to be back in the running. I think the close could be messy if not.

final update: In classic fashion markets ended ambiguously on the close with the 2707 line being the divider and SPX closing right at that level. A 5m BUY was once again given just prior to the close and continued afterwards. The close today was another example of why trading a volatile market requires well defined exit points. In one instance the market jumped 8pts in 1 minute! Had my exit not been defined I would have gave up a lot of ground. Instead, I was stopped from my short and went investigating the possible long.

I plan on posting a more detailed analysis of major markets tomorrow.

 

Trade Safe

-JMX

 

Alphastorms Stockbot Update 2-14-18 – Hang on to your..er.. Happy Valentines!

This is setting up to be another very volatile day!

If the market is unable to recover directly over the session, I see the next indices target being the lows of the 9th for a retrace.

Momentum trader Signals

ES/SPX: SELL at 0700

Update 0912: This recovery bounce from the bottom is happening without much market participation (likely related to short covering or the limited liquidity). I think the open (or shortly after the open) will determine whether this bounce sticks. As I write this, I am beginning to see positive signs building in the 5m charts but have yet to see a peep from my Stockbot Momentum Trader or Cyclic Trader algorithms.

1M W5 extension (bullish) confirmed at 0928 and carried into the open. 5m Stockbot buy triggered on the open (0930) but I normally only trade 15m to 1H signals for sanity reasons.

I am also aware that the sudden and massive decline in ES makes it so that any relative momentum moving forward is muted. Still, I prefer to wait for good signals. That being said, the 5m very short-term and 1M ultra short-term signals are on the table.

Update 1027: Solid buying continues with momentum continuing up the chain. I have a small position in from the 1M entry and 5M entries that I called out this morning.

That being said, while signs continue bullish, we’re approaching ‘profit taking’ as bullish volume is beginning to diminish a bit.

Technical pattern is pointing towards a massive ending diagonal (drop) or a massive bullish consolidation. We should know here in a bit.

Update 1123: Bullish 15m/5m momentum remains but I should note that the technical pattern is beginning to look bearish if the price cannot break above 2677, the failure price could be way down in the 2630 level if so (diagonal C where A=C).

Update 1230: New Momentum trader BUY signals at 12:25 (for very near-term).  I covered and am done for the day but with the 15m still in play right now the odds are in favor of moving higher. However, if you entered on the original signals at 0928 and 1030 then you’re in a much safer position in the event that the price fails to break 2677 yet again. I continue to see much larger sell volume than buy volume ever since the price broke above 2670. It’s been chopping sideways every since.

Update 1234: If RTY (RUT) is an early warning (it sometimes is), then tread carefully. Price has been coiling for a few hours every since filling the gap and would indicate more risk to the downside. For now our SPX zone is 2677 to 2670 with sustained trade under 2668 probably leading lower to 2664 and perhaps all the way to our downside target. On the upside the target is still 2700. These targets require sustained trading over/under them (price action).

Update 13:10: SPX opens up the valve and bullish sentiment leads once we crossed that 2677 hump. 1H strong BUY targeting 2700 is now in play. If you weren’t in at the top of the hour, waiting for a pullback is likely the lower risk entry. Typically when a 15M Stockbot Momentum buy turns into a 1H Momentum buy, it’s a strong signal.

Update 15:00: SPX is just shy of our target of 2700. I lightened up a little. There’s still a distinct possibility of panic buying (the opposite of panic selling) into the close. At this point, you should be well enough into the money that letting a few contracts run into the close is relatively low risk. Support channel is far below around 2690 . If that were to break (sustained trade under, I think the whole thing might roll over), I suspect the entire thing might roll over. For now, the trend continues to roll with momentum. Another _very late_ entry was given at 1500. If you’re just entering now, keep your stop nearby.

Update 1545: 2695 remains the point to watch. I was able to clear most contracts at 2700 on pivots which was a valentines day gift.

Oil (CL/QM): Overnight SELL at 0300 still in effect

Update: Overnight SELL converted into a BUY on the open. Historically with what I call ‘long poles’ (from my point and figure charting days), I tend to be wary of reversals prior to the continuation. This is primarily when a move up is basically 100% bullish momentum after being 100% bearish. At times these tend to be short affairs that quickly top out and are best traded on the short-term.

Gold (GC): Showing initial recover signs but still within a SELL signal.

Update: Momentum Trader 15m BUY signal on the open (this is a pretty strong buy – over the near-term)

2/10 Yr Treasuries: Selling off like crazy this morning.. with 0200 SELL signal only now finding a near-term bottom

Bitcoin (BTC): Hourly BUY at 2200 remains in effect though may be nearing its end.

Update: 0945: Early SELL warning may be forming but no notice yet from Stockbot. Tread Careful.

Soybean Meal (ZM): Early BUY signal via 15m @ 0945

Update: 1610: Signing off. Today we were able to capture nearly 60pts on the SPX! With an average of 30pts per strategy with the 15m Momentum strategy capturing the lions share of 70pts.

This being Valentine’s Day, updates will be few and far between as I will leave Stockbot mostly on automated mode. I’ll try to put in an update if large momentum swings occur and I can sneak to the computer.

Cheers and Trade Safe,

Jmx

Alphastorms StockBot update 2-13-18 – More chop on the horizon!

Limited updates today due to connectivity. I’ll post updates as I can.

With today’s extreme volatility, you could be excused from wanting to step aside and let the market go on by. In many cases, the extreme movement within a given interval allowed you to profit whether long or short. Playing the drop and the subsequent bounce this morning worked well. At the moment I am tracking ES/SPX for follow-thru. When this consolidation breaks we’ll likely see a large momentum drive move begin.

Momentum Trader Events:

ES/SPX: Hourly BUY signal triggered at 1000. This is usually a good buy for 1-8 hours depending on the wave pattern. I’ll try to post the SELL signal as soon as it occurs. 15M BUY signal triggered a w5 extension at around the same time. These two together are usually tricky. Wave 5’s can end abruptly. When they don’t, it’s usually a fairly sustained rally. I’ll try to post first signs of 15m Wave 5 decline.

Surprisingly despite the insane volatility, the trend remains bullish for the time being. The price has found it’s way back to a trend line established during bullish action at the close on 2/9 and may very well be a continuation.

Update 13:25 – BOOM! Momentum Trader does its magic and we capture a massive burst on the 1H and 15M strategies.

ES Signaled another W5 extension at 1345. Once again, they can end abruptly but if not they can serve as a launch point for new highs.

If this is a normal 1H momentum trend, the peak profit is anyone in the next 1-2 hours. Of course, with W5s these can end abruptly anytime. Sustaining above 2660.5 would be bullish. Falling below could lead to a retrace all the way down to 2647 (and perhaps spiking further) before another rally up to the same level. We are still not technically out of the consolidation zone.

Update: 1400: As stated, once the 2660.5 support held, price launched. This is a decent profit taking area.

Update 14:45:  As we approach the final hour of the trading day, we see the SPX hoving around the 2660 support level. We want to see it stay over, otherwise we could see a sharp decline into the final hour. If oyu haven’t already taken profits, that time is drawing short. IF the W5 holds the trend line we could see 2668+ into the close.

Update 1514: ES/SPX continues to bounce off trend support. Volatility is expanding into the final hour. We will see if 2660 holds for yet another test and acts as a springboard into the close.

Update 1530: Conveniently there’s only space for about 1 more candle on this 15m wedge into the close.

We may see it resolved into the close. If not, it’ll extend overnight and likely resolve on tomorrow’s news.

Update: 1600: Heading to the gym. All positions closed. Closed ES positions at 2663 when I walked off at 1530. Initially I thought that might be premature but upon returning it seems as though the price is back to coiling around the trendline. High likelihood of a gap up tomorrow. It all depends on whether the 2660 price level is held. With the trend-line a good 20pts below, I’d prefer to watch price action over the evening rather than hold into the close.

 

Gold (GC): Hourly BUY signal triggered at 1100. Haven’t seen any follow through just yet. These sort of partial waves are trickier to enter once they’ve already taken off.

Update: May be looking at some chop and/or failure. Very recent SELL without enough time for the momentum to full recoil either means that the BULLS have found support around 1327.5 or we’re going to see a failure of the bounce (not enough Bullish momentum to overcome the recent SELL signal which was uncoiling. No position here.

Update 1610: After some chop, the price ultimately resolved itself higher. Even so, it was probably better off being avoided as there were more lucrative opportunities.

OIL (CL/QM): No change, Last was a Daily SELL from 1/30 and an Hourly SELL from 0400 (Hong Kong Markets). An Hourly BUY may be in its initial stages of forming but I have about 49 minutes before Stockbot generates another Hourly BUY/SELL.

Update: Hourly BUY signal at 1200. BEcause this is a BULL signal within a pre-existing downtrend, tread carefully.

QM/CL continues to consolidate for a big more. Current momentum is north though the trend is bearish. Hopefully it moves in the next hour or so.

Update 1610: CL/QM continues to coil, no measurable movement nor change of patterns. I closed this position for a slight profit after it became tedious – minimal price action.

Bitcoin (BTC): Bitcoin is back to an Hourly SELL after capturing our target yesterday at 8700. SELL triggered at 2000 and continues today.

Update 1610: Stockbot issued a tentative hourly BUY signal for BTC at 1500 . I say tentative because the on-balance is 50%, meaning there isn’t overwhelmingly bullish momentum. As a rule, this is the bear minimum required for a Stockbot Momentum Trader signal to be executed – but is considered low reliability until on-balance momentum reaches 75% or greater (75% bullish movement).

Soybeans (ZM): Soybeans are extending the rally I reported on 2/8 (Daily strong BUY) with an Hourly BUY at 0900. Price seems to be consolidating a bit at this level.

Update: 15m SELL at 1200 but stronger Hourly BUY momentum remains in place. Looks like it may be forming for a bullish move if Bulls can hold above 365. Bullish flag forming. but with so little liquidity, I don’t always trust these moves. Decent place for a long position, with a stop just under 365 level.

ZM failed to sustain the rally with the 15M SELL coming in at 1411, just shy of the 365 level. Hourly it’s still a buy until a break of 361.

Trade Safe

Jmx

Evening Update

Some evening analysis..

My what a day session it was! We are left with a decision point which may resolve itself in the overnight session but I suspect it’ll be left inconclusive and left for the early morning/day session to figure out.

Right now, with SPX bouncing off of it’s lows it was a relatively easy LONG position with little to risk if the market were to decline further. So long as SPX remains in the crash channel there is a very real risk that this could develop into an even deeper drop. For now, I consider that to be the lower probability scenario. As you can see below, the extreme bearish volume could have only had one conclusion today.

On the other side we have the option for this low to be the bottom of W5 and the start of a major rally which will take either whip saw us for a few days or take us fairly directly towards all-time highs. While I suspect that this would ultimately resolve bearishly – we don’t try to predict the market.

For the moment, I am awaiting a signal from Stockbot which will generate a Momentum buy. The moment SELL from 1000 remains intact though comes into question if that crash channel breaks.

As I write this (2033) it appears that the trend line has been tested once and failed. I’m waiting to see a Momentum Trader trigger in the 15m interval which would be valid for a SELL entry so long as our 1H entry is still in play.

 

In other news, BTC gave a BUY signal at 0200 and a SELL signal at 1000. I was initially perplexed by the rise in price but ultimately the sell pressure won over and it has collapsed below 8000 again (7900) at the time of this writing.  As good as Stockbot is, it cannot predict a bottom or top. Any low-risk entry would have to wait until a new BUY/SELL signal appears.

 

I will post tomorrow’s analysis of major markets in the morning.

Day’s Performance

Trading the moves triggered by stock-bot today yielded a modest 5.52% total portfolio gains. It wasn’t a smash-it-out-of-the-park success but nevertheless quite impressive for a single day’s trading. Part of the reason for the “good but not AMAZING” performance was my own hesitation. I second guessed my own algorithms and took smaller position sizes than I normally do. Thus, what could have been a 15% day was a 5% day. Nevertheless, walking away with profits is always a success. Average risk per trade today was  0.211% with 15 trades and a win rate of 53.33%. 97% of profits came from shorts while 3% from longs.

 

Stockbot 2-7-18 : A decision day for SPX

Stockbot Momentum Trigger Day Trades (as of 0850):

Yen (J6/J7): SELL signal if below .0091835 (09:00 expected)

Soybean Meal(ZM): SELL signal at midnight and reconfirmed at 0600. Likely that selling continues if near-term price reverts under 334.0

Soybean Oil (ZL): SELL signal at 22:00 (2/6) and continuing to grind sideways until a larger sell signal at 0800. Sustained break of 33.0 would likely result in a large decline.

Natural Gas (NG): Another sell signal (continuation) if NG reverses below 2.720. At the moment bulls are trying hard to reverse it.

OIL (CL/QM): Potential buy trend forming. Stockbot Momentum Trader flashed a BUY on the 15m interval. If this continues (north of 63.250) then it can likely turn into a longer term hourly signal. At the moment it’s a WATCH, given the current trend is BEARISH.

Silver (SI): SELL signal triggered at 0245 (Asia Markets) and continued into an hourly SELL at 0700.

Gold (GC): SELL signal triggered at 0400 (HK Markets) on break of 1331.7. Selling continued to form into an hourly SELL at 0700.

2yr/ 10yr T-Note (ZT): SELL signal at 0600. After a counter-trend rally, selling resumes

Bitcoin (BTC): Rally from 0400 (HK) looks to be losing some strength as a 0845 Stockbot 15m SELL signal appeared. Hourly it’s looking a bit top heavy. Now is not a high probability entry (despite the consolidations potential to break north)

SPX (ES): Rally from  bottom signaled at 2/6 0300 continues with support from 15m rallies. With strength waning at critical resistance levels, looking to see if it holds or begins a capitulation signal.

**Update 11:00

SPX Uptrend beginning at 10:50 was a great entry point. I will post others as they occur, time permitting.

CL/QM OIL dive has been an excellent ride. The failure potential (in the update above) triggered a SELL at QM 63.5

Bitcoin (BTC): weak 5m momentum trigger at 11:10. The overall hourly structure continues to look weak with sell waves into the uptrend. I suspect this may roll over if a breach of 8139 occurs.

**UPDATE 11:59

Soybean Meal (ZM): inability to move 1hr momentum means you should tighten stops or take profit. 5m looks poised for an extension but these have a tendency to fail sharply when they do. Break below 334 would be trend change.

NG dropped hard, small recovery bounce here. Selling is slowing, also a chance to take some profits.

Bitcoin (BTC): After extension failure at 0850, price is compressing for a move. Short-term trend is still bullish but a break of recent support at 8140 means that we’ll have to wait and let the price tells us the direction. 1HR still supports the idea of a bounce off trend line (8000-8077). Next target would be 8750 if that’s the case.

ES/SPX supprt at 2710 is the area to watch as price approaches rising support line. 5m momentum is bearish but 1hr technicals are still bullish. StockBot Momentum Trader has no new entries since 2/6 (at both 0300 and 14:00). 2750 remains the upper target if price breaks out. First break out would be sustained trading above 2726.75

**UPDATE

BTC new 5m rally off the trend line (per previous update above) confirmed at 12:05.

ES (SPX): 15:45 it’s looking like it’s time to take some off the table and ensure stops are where you’d like. With rising selling pressure there’s risk of a sudden end of day drop. though more than likely it will end right around the 2700-2690 level. Thus far price has stayed above 2780 trendline but is under rising 1h trendline (our first warning sign).

**UPDATE 1559

ES/SPX : 1h Stockbot momentum SELL signal triggered. That’s our exit on this trade. Good for between 40 and 100 pts depending on where you entered/exited. I collected 100pts. I prefer to exit on trend breaks rather than wait for the official sell signal – which sometimes get’s me out early but usually works well when momentum is sufficiently bullish.

BTC: Though still bullish, broke the trend line and as such should be treated with care. This is a place to at least take profits 8100-8200 (signal was at 6200-6600 for a 2000pt or 30% gain.

Closed QM prematurely but collected most of the drop, from 63.5 to 62.00

 

Trade Safe