Written by:
Patrick Mikula CTA
Mikula Forecasting Company
www.MikulaForecasting.com
patrick@MikulaForecasting.com
Copyright © 2007 by Patrick Mikula All Rights Reserved.
1.) A look at The Dow-mini YM for Nov 8, 2007
When I start trading the markets I always have a game plan for that day. Today Nov 8 I threw the game plan out soon after the market opened because the Federal Reserve chairman Ben Bernanke made some statements that sent a very bearish sentiment through the markets. When the markets give you this type of a gift you don’t debate you just trade it. I threw out my game plan and added the MarketWarrior indicator “Square of Nine Chapter 2″ to my chart. This indicator does very well in the Dow to find support and resistance price levels. This is shown on the first chart below which is a 5 minute bar chart for Nov 8, 2007. I have circled the places where the Dow made tops and bottoms on this indicator’s price levels. I traded these swings as the market bounced between these Square of Nine price levels.
2.) Forecasting Tomorrow’s 1 Minute Chart for the Dow, Nov 9, 2007
Tomorrow Nov 9 is Friday which is the most important trading day of the week. Some times I think I could make a living just trading on Fridays. I have setup the MarketWarrior indicator “Fractal One Minute Index” on the next chart below. This chart shows a 1 minute chart for the Dow mini YM. This indicator is intended to be used by setting the indicator up today for tomorrow’s market. The idea is this, the best predictor of the next set of market swings in the current set of market swings. So we set this indicator up today Nov 8 and then use these setting to trade tomorrow Nov 9. Part of my trading game plan for Nov 9 will be to watch a 1 minute chart of YM with this indicator on the chart. If you own the MarketWarrior program you are read the version of this post on the MarketWarrior owner’s web page and there I have posted the settings for this forecast so you can reproduce this forecast on your computer. After the markets close tomorrow I will post a picture of the chart and discuss how the forecast worked out.
end.
Written by:
Patrick Mikula CTA
Mikula Forecasting Company
www.MikulaForecasting.com
patrick@MikulaForecasting.com
Copyright © 2007 by Patrick Mikula All Rights Reserved.
Chart 1.) Preparing to Trade The Dow mini contract YM
The charts below show the real-time version of MarketWarrior. The screen shots were taken during the day as I traded a 5 minute chart for the Dow Mini contract, symbol YM. When I start trading in the morning, the first thing I do is add the MarketWarrior aspect indicator to a chart and check if there are any aspects which occur during the main trading day. Most markets trade almost 24 hours now but the trading that occurs outside of the main day session usually has very low volume.
On the first chart below, you can see there are two aspects that fell during the day on Nov. 7, 2007. The first aspect was between the moon and sun. This aspect marks the beginning of an aspect-time-window when I will be looking for an opportunity to trade.
Chart 2.) Entering The Trade
As the first aspect approached I was watching the indicators Super-Pitchfork and a 50 period Regression Line. On the chart below, I have labeled two small tops A and B. At top A I noticed that the market had failed to return to pitchfork Median Line. This is a reliable sign of market weakness. Also at point A, the market made a top on the Regression Line.
The normal situation is to have tops formed above the Regression Line. Forming a top on the Regression Line was an additional sign of market weakness. Next at top B, the market again formed a second top on the Regression Line which was another sign of weakness. Notice that this was all occurring right around the aspect-time-window exactly where I wanted to see a change in trend. When the prices fell below the Super-Pitchfork Lower Parallel Line, it indicated to me the market was tuning down. I sold short at the arrow labeled C. The short trade entered at a price of 13533.
Chart 3.) Exiting The Trade
As you can see on the final chart, the mini-Dow had a strong decline from the aspect-time-window. The decline saw the price bars forming below the Regression Line. When the market showed that the down swing might be ending by returning to the Regression Line, I exited the trade. The exit price is 13441 and is identified by the arrow labeled “Exit Here”. The trade covered 92 Dow points from entry to exit. This Dow contract is valued at $5 per point so the trade value was $460 per contract.
