Out With The Old – In With The New

In yesterday afternoon’s post we covered some of the logistic of our ongoing YM campaign. If you missed it then I strongly recommend you go back to read it as it covers a real world example of how to plan, enter, and manage a trade based on Ivan’s ProtectR rules. Nothing beats teaching by real world example in my book.

Now if you paid attention then you are aware that one of our ProtectR rules stipulated that we need to earn 1R by the end of the third candle – which incidentally includes the entry candle as well. Today is the day and as it does not appear as if the YM is going to claw its way up to 16,143 (1R measured from our 15,986 entry) we’ll be closing this one out. Since the YM trades continuously it is your choice as to whether you do this a few minutes ahead of the close or afterward.

BUT that does not mean we have come to the end of the road on the equities side. As it so happens we’re most likely going to paint an inside day and that means we have a bi-directional setup starting tonight after the close. The triggers are today’s top/bottom and since it’s  small entry we’ll be able to play with a larger R size. That has positives but also negatives, as usual nothing is black and white. The positive is that we may earn a chunk of change if this thing takes off – the negative is that we are also whipsawed more easily.

Here’s the same setup on the ES – triggers are on the chart. Interestingly the downside trigger is right below a NLBL which was conquered recently. A drop below would present a failure and that could be short term bearish.

A notion that becomes even more interesting given our current configuration on the VIX. I rarely have seen such a pronounced and contrasting Bollinger band compression. No, it’s not a medical condition but you may attempt to treat with generous helpings of Hefeweizen.

Seriously speaking – the expectation here is that we’ll most likely going to see some acceleration here. Perhaps not before X-Mas but I think we may just be in for a very interesting January 😉

Quick update on our NQ entry from this morning. I did get whipsawed there but if you managed to catch that initial stab above our NLBL then you are sitting nicely right now. Time to take profits I would say – this wasn’t too shabby for a few hours of work.

Ditto on the TF – boy o boy – that was almost textbook. See – THIS is what I mean by volatility explosion after a compression like this. I expect a similar move (down or up) on the daily side either in December or January.

BTW, if you missed those two then I strongly suggest you sign up for my morning briefing. Those two were available for free – so you if you didn’t catch them you missed out! Easily remedied however – use the signup widget below or on the sidebar on the right >>>>

Alright many of you seem to be already getting ready for Thanksgiving – can’t really blame you especially since we’ve been working our butts off lately. So that’ll be it for tonight but I’ll be back tomorrow when we’ll most likely focus on a general market outlook as I don’t expect anyone to be trading over the long weekend.

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Cheers,