Archive | October, 2010

Week 44 Analysis

31 Oct

Another week packed full of news including FOMC Minutes Wednesday. Looking to finally break out of the range we have been in for the past few weeks.
As the month of October comes to a close, we see a market that has been very resilient of a pullback. Since we put in highs in the S&P futures at 1193 we have seen a market that has been quite choppy. With targets at 1201 which should be reached this week, don’t be surprised to see somewhat of a breather or pullback in this market. A pullback and possibly of a trend change could produce some exciting moves for new trader setups in November.

The bulls have defended many crucial pullbacks this month, especially the 1170 level. When looking at the SPY we see a max pain level of 117, which is the most amount of pain or “heat” option traders are willing to take before a trend change. This 117 level also lines up with a failure of a 61.8% line of our last bullish setup, in the /ES, 1169’s. Look for a break or failure of this level for a possibly trend change.

Discipline in Trading is a 24-7-365 Job

28 Oct

Discipline is not something you do 9 out of 10 times or only when you feel like it, it’s something that must be enacted 24-7-365. In trading, breaking your rules “just this once” is a recipe for disaster. Don’t kid yourself, if you want to be consistent trading the markets you must remain disciplined every single day both in the trades you take and in your afterhour’s analysis.

The more diligent and thorough your attitude towards the markets, the faster you will progress. In the markets you are paid based on your level of discipline. Remain disciplined 100% of the time, all the time.

The Mayonnaise Jar and 2 Beers

26 Oct

When things in your life seem almost too much to handle, when 24 hours in a day are not enough, remember the mayonnaise jar and the 2 Beers.

A professor stood before his philosophy class and had some items in front of him. When the class began, he wordlessly picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls. He then asked the students if the jar was full.

They agreed that it was.

The professor then picked up a box of pebbles and poured them into the jar He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was.

The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with an unanimous ‘yes.

The professor then produced two Beers from under the table and poured the entire contents into the jar effectively filling the empty space between the sand. The students laughed.

‘Now,’ said the professor as the laughter subsided, ‘I want you to recognize that this jar represents your life. The golf balls are the important things—your family, your children, your health, your friends and your favorite passions—and if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, your house and your car. The sand is everything else—the small stuff. ‘If you put the sand into the jar first,’ he continued, ‘there is no room for the pebbles or the golf balls. The same goes for life.

If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.

‘Pay attention to the things that are critical to your happiness. Spend time with your children and grandchildren. Spend time with your parents. Visit with grandparents. Take time to get medical checkups. Take your spouse out to dinner.

Play another 18. There will always be time to clean the house and fix the disposal. Take care of the golf balls first—the things that really matter. Set your priorities. The rest is just sand.’

One of the students raised her hand and inquired what the Beer represented. The professor smiled and said, ‘I’m glad you asked.’

The Beer just shows you that no matter how full your life may seem, there’s always room for a couple of Beers with a friend.

Week 43 Analysis

24 Oct

We have seen a lot of chop around the S&P 500 $1180 level. This can be expected as we are in the midst of earnings season. We should see a break one way or another this week especially with GDP on Friday.
As a clue to the direction of this break we look to the VIX and as of late, it has been on the decline, holding in the upper teens. In order to sustain new highs we would need the VIX to break $17.90 and hold it.

2011 Stock Market Holidays

24 Oct

Below is a list of the market holidays for 2011 in which the stock market will be closed.

Martin Luther King, Jr. Day

January 17, 2011

Washington’s Birthday (Presidents’ Day)

February 21, 2011

Good Friday

April 22, 2011

Memorial Day

May 30, 2011

Independence Day

July 4, 2011

Labor Day

September 5, 2011

Thanksgiving Day

November 24, 2011

Christmas Day (observed)

December 26, 2011

2010 – Stock Market Holidays

24 Oct

New Year’s Day
January 1, 2010

Martin Luther King, Jr. Day
January 18, 2010

Washington’s Birthday (Presidents’ Day)
February 15, 2010

Good Friday
April 2, 2010

Memorial Day
May 31, 2010

Independence Day (observed)
July 5, 2010

Labor Day
September 6, 2010

Thanksgiving Day
November 25, 2010

Christmas Day (observed)
December 24, 2010

E-mini Futures Tick Sizes

23 Oct

Tick size or tick value for futures represents the minimum fluctuation in price of a futures contract. Rather than trade in penny increments like stocks, futures contracts trade in ticks. This value is denoted in various dollar amounts per contract. For euro futures a tick and pip is essentially the same thing.

E-mini S&P

  • Ticker Symbol: ES
  • Value of 1 Tick: $12.50
  • Ticks per Point: 4

E-mini Dow

  • Ticker Symbol: YM
  • Value of 1 Tick: $5.00
  • Ticks per Point: 1

E-mini NASDAQ

  • Ticker Symbol: NQ
    Value of 1 Tick: $5.00
    Ticks per Point: 4

E-mini Russell

  • Ticker Symbol: TF
  • Value of 1 Tick: $10.00
  • Ticks per Point: 10

Euro FX

  • Ticker Symbol: 6E
  • Value of 1 pip: $12.50
  • Ticks per Point: n/a
  • Note: In Feb 2016, the Euro FX moved to half pips of $6.25

An additional note, the S&P 500 aka. the “big” trades in $0.10 increments. Often times pit traders will buy contracts in the S&P pit @ a dime and using a headset flip them on the e-mini Globex exchange, this is known as big/mini arbitrage (arb).

I use thinkorswim® charts powered by TDAmeritrade for my trading. I recommend giving them a try!

Futures Contract Month Codes Explained

21 Oct

For those who trade or are interested in trading e-mini Futures, you may be wondering how the contact symbols are constructed and what they mean (eg: /ESZ0). The four e-mini index futures are S&P (ES), Dow (YM), NASDAQ (NQ), and Russell (TF). The e-mini Euro Future contract is 6E.
All platforms have their own form, but the basic letters and contract months are the same. For the thinkorswim platform, simply typing /ES will pull up the front month e-mini S&P contract.

The second half of the symbol relates to the contract month or the year. Futures contracts every four months as follows, March (H), June (M), September (U), December (Z) followed by the year 2010, or in the case of thinkorswim, the last digit of the year (2010 = 0).

So as of October 21, 2010 the front month contracts on TOS (thinkorswim) are as follows…

  • E-mini S&P – ESZ0
  • E-mini Dow – YMZ0
  • E-mini Nasdaq – NQZ0
  • E-mini Russell – TFZ0
  • E-mini Euro – 6EZ0