Feb 162011

Yesterday I wrote about a potential market turn.  Shortly after, Bund dropped below its trading range.  That set off some stops and some breakout traders went short.  The professionals accumulated all the selling and the result was a Wyckoff spring:

The breakout today was amazing.  Very swift without any pullback opportunities.  This goes to show why trading is so hard.  Yesterday I did not trade the Bund when it broke below its trading range.  It happened during lunch and after lunch I focus on ES.  So I missed, what today became obvious as an extraordinary opportunity.

So today I recognized the rotation was up and I tried two longs.  First stopped out and second scratched.  The bund dropped back down towards the open and I wrote in my journal that I would be sitting out as the Bund was rotating around the micro-composite VPOC.

It broke the IB by 1 tick and dropped back down.  I was still not seeing any trade setups.  And then it came.  An explosive breakout and no pullbacks as it went straight up.

The only opportunity to get on board came right at 11:30am news and the H period took out the G period high.  Call me a skeptic but I think they plan it that way.  The spring yesterday at lunch & the break right during news.  The result is traders have to chase it or miss it.  I choose to miss it.

So what does this mean for equities?  Stoxx just did a Wyckoff Spring up above its trading range and is hoovering on the edge.  Stoxx is a little guy, he needs the US market’s permission to move.  The professionals might use the news releases today to drop ES down.

I see trading as a series of steps:

  1. Learn to see these developments in hindsight
  2. Learn to see them just after they happen (intraday)
  3. Learn to see them as they’re happening
  4. Learn to anticipate them
  5. Learn to profit from them

I’m on stage 2 with a little bit of progress on stage 3.  I hope to make it to stages 4 & 5 some day.

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