January 21, 2014 - MDT - Pattern Explanation

While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.

Today into tomorrow is when I'm looking for market direction to be confirmed.

Will the Equity Indices hold up or go into profit taking mode?

Spu/Bond spread is Long Equities ( S&P 500 Index/Short 30 yr. Treasuries) This helps us identify asset allocation.

TBT which is the 20 yr. double short Bond ETF is trading very close to it's 200 day mvg avg @ 73.38 (this is support).

GS is a leading component of the financials which was the early drag on the Indices, came into good support with defined risk.

Goldman was trading at support when the Equity indices looked their worst.

These market tells should have Short term traders BUY before they SELL Equities and Equity Indices at these ORL levels.

We look at the Outside reversal #'s to identify where the short term players get stopped out of the market.

Today the ORL #'s identified the area where weak longs gave up going into London's close.

Time Frame Trading...the low in the Indices was put in at a time of day when order flows tend to abate or reverse.

The selling was over after London's close leaving, the market to drift back higher with no new selling out of the U.S.

I mention these levels so short time?frame traders ( Day Traders) have a heads up to potential directional traps.

These are levels to look for profitable low risk contra trend trades with extremely tight stops for the day session.

New subscribers should go to the MHFT site and review my webinar on pattern recognition where I go into indepth detail on how to profit from these pattern levels.

I'm waiting for an upside breakout to buy the indices. (Over today's high)

We're still churning around in the Indices and I will wait for tomorrow to let the short term direction have time to reveal itself.

Individual names should be analyzed and traded based off their own technical s.

For Glossary of terms and abbreviations click here.

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