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Is The Trend Still A Friend?

Crisis in Crimea is another opportunity for contrarian traders to short the markets as SnP500 levitate at all-time-high prices - and an opportunity for trend traders to buy the dips.

Right now the Divergence Sell Signals on the intraday and daily charts have already triggered successfully thus short-term contrarian traders main job is to nurse their positions in expectation of more meltdowns to come.

>> Intraday Bearish View:

The Divergence Sell Signal on the weekly chart has not triggered yet and will trigger if SnP500 goes down this week. Until then medium-term contrarian traders are mostly waiting for their entry with some swing traders probably has already taken some positions shorting the markets using the Divergence Sell Signals on either the intraday or daily charts (or both). See previous Instablog for Daily and/or Weekly Charts Analyses.


For trend traders; the trend is a friend until it is no more but the going is getting much tougher thus caution is being called for for medium-term traders.

For short-term traders; heroes die on the battlefield sooner than most; thus it is not worth sacrificing hard earned capital by trying to be a hero.

Finding potential high probability entries and minimizing losses on losing trades, while maximizing profits on successful trades, are of prime importance:

<< Intraday Bullish View Before:

<< Intraday Bullish View Scene #1:

>> Intraday Bullish View Scene #2:

Scene #1 was from my Comment of March 12, 2014.

Obviously, a strong rally above the most recent high is needed in order to give initial confirmation the bullish view is the correction chart interpretation.


Trading Strategies:

Successful traders are agnostic. They are neither bullish nor bearish (most of the time). They believe the market will NOT go up forever NOR will it go down forever. The most important part is that they are given viable entries and exits in order to execute as many trades as possible. Time is definitely not a friend thus failing trades have to be terminated as soon as possible to minimize losses and winning trades are trailed with tighter stops, as time goes by, in expectation a reversal is going to happen sooner or later in order to maximize profits - when targets are still far from being reached.

With that in mind; those who executed the initial Bullish View should have made profits by using Trailing Stops as SnP500 rallied from the Feb 20 bottom. Those that used Scene #1 could also have made some profits if they used Trailing Stops and/or incurred a small loss if they used bottom Hard Stops.

Scene #2 is obviously to make another trade on re-entry above the Major Blue Support Line then use the most recent low as an SOP Hard Stop.

For me: My short-term Daytrading strategy is becoming shorter and shorter to the brink of becoming Scalp Trading. Thus, not practical to innumerate my trades. Suffice to say that there are winning and losing trades with success rate not being able to keep up with the usual 3:1 win vs. loss ratio many Daytraders try to achieve over the years. This is expected to happen since Intraday Trading or Scalp Trading is the hardest form far too many traders have failed. 75% of Discretionary Traders lose out within their first 6 years in the markets. 93% of Intraday Traders lost out after just 3 years.


For those who might want to learn more the processes by which I usually try to bottom buy; these are for this particular case:

>> ES 240min Chart:

>> NQ 240min Chart:

>> YM Tick Chart:

>> GDOW 240min Chart:

Obviously, this type of trading is extremely stressful (practiced by one Master Trader I used to subscribe to - when crises were happening from abroad). I have to monitor how the futures markets would perform after the Crimea election. Remained awake well past 6 pm Sunday Eastern Time. eMini Futures opens at 6 am Monday Asia Time. Well past 2 am ET when crises happened in Europe and/or the MENA in the past years.

* Bought some YM near the 150% Fibonacci Extension (for the YM chart). Will try to buy some more if and when SnP500 produced a credible a-b-c pullback down on either the 15min or 30min charts. Hopefully within the next few days (FOMC Meeting next 2 days).

>> QQQ 15min Chart:

You can use the Gap Supports for SPY and/or QQQ for entry. Otherwise, try to buy a breakout if SPY and/or QQQ fail to produce deep enough pullback down (= or > 50%) on 5min to 15min charts.