Friday, March 06, 2009

Follow This to Find the Bounces in the Market Ahead of Everyone Else

Across the Twitter comes all sorts of traders trying to guess where this beast is going.  Of course the goods ones just size up the chart and let it tell them what's going on - using their risk management skills to live and see another day.
QuantBot @day54 oh, now crammer is calling bottoms since hes helped blow up everyones accounts? LOL $$
Plus I had some good IM posts with friend Andy Swan asking what event might serve as a catalyst for a turnaround?  I said just let GM fail and give the market the red meat it wants and America the chance to have new companies step in and build new, clean vehicles.  Yeah simplistic. Something said over a cocktail.

The real trader response: "Whatever 'It' is, I'll believe the bounce/rally when I see it [on the chart]".

So let's build something in Trade-Ideas that can monitor what a bounce looks like.

Candlestick Version

Here's a quick and simple set-up of how a candlesticker would look for a bounce.  Tinker with the filters to better model your trading universe.

"15 Minute Bounce w/+ Market Direction" -

Important caveat for me: Now more than ever if you are hunting for anything resembling a stable bounce, make sure the markets are in your direction when the alert happens.  Thankfully Trade-Ideas includes these directional filters for the S&P, Dow, and NASDAQ on multiple timeframes.

Another way to hunt for the bounce is to look at Moving Average crossovers - either on day periods or intraday periods.

Moving Average Crossovers Version

Here's a quick and simple set-up of how a MA crossover would look for a bounce.  Tinker with the filters to better model your trading universe.  This also uses Trade-Ideas' market directional filters.

"15 Minute Bounce (20p MA over 200p) w/+ Mkt Direction" -

Click on the shorten links to these strategies.  From the browser that opens take the http:// address and import it into Trade-Ideas PRO using the Collaborate feature.  Then begin applying your risk management rules in The OddsMaker to see what odds you have in making profitable trades.

Believe me these will come in handy when whatever event you decide heralds the turnaround eventually translates onto the charts.  Happy hunting!

UPDATE: As if on cue - minutes after posting this message the markets stage a nice 30 minute rally into the close, Friday, March 6, 2009.  This being the best explanation I read:
thehawaiitrader Classic... bears don't want to hold into weekend, hence cover.
These strategies all started popping into the close - proving they'll not only catch THE Bounce, but the smaller bounces too.  Nice.

1 comment:

Gio said...

Haha. Nice. U know I got TradeIdeas running on one of my monitors.