Trading What I See

For many of us, Trend Days are harder to trade than the normal up and down moves we encounter for most of the month. I sometimes spend trend mornings trying to find reversal points that never appear. And oscillators won’t give you an oversold condition until it’s too late. What’s a trader to do?

Reading the NYSE TRIN helps. (Numbers below 1.0 - and particularly below 0.80 are bullish.) Because of the way it is calculated, the readings for the first half hour can be deceptive, but look at the 30 minute TRIN readings from this morning: .69, .74, .62, .62, .68, .79, .95. That last 95 reading came during the lunchtime consolidation.

The definition of a TREND DAY might also help. For me, a Trend Day starts and finishes at the opposite ends of a wide range day. And they often have a nice consolidation pattern right in the middle. There’s a secret in that definition. If the consolidation pattern comes in the middle, you can make a profit even if you miss the first half.

The morning session made a well-channeled nine point move containing several nice pullback entries. Then came an hour and a half consolidation during lunch. If the pattern holds, there should be another nice move in the afternoon — and there was. Another nine points.

The trendline structure is also interesting. The first channel could have been drawn 36 minutes into the trading session. It held, and the bottom trendline provided pullback entry signals until the noon consolidation. And where did the market stop in the afternoon? The other side of that same line.

If you haven’t worked a great deal with trendlines you might be surprised to see that the afternoon pullback turned around at another parallel to the original trendline drawn early in the morning. It happens often enough that you should be watching.