A dead cat bounce is traditionally described (for example Investopedia) as “a small, brief recovery in the price of a declining market”. We day traders like to look at it a bit differently – because when we anticipate these bounces, we can take profits smartly and quickly. For us, a dead cat bounce is the pull back we see after a very strong reaction to a news item, or any quick, strong movement, either up or down. The typical behavior to a significant news announcement is very strong movement, very quickly. [Read more…]
Bull Markets Climb Stairs, Bear Markets Fall Out of Bed, what the heck does that mean? It just means that, in general, if the market is climbing, it climbs more slowly, with stops and starts, and if the market is falling, it tends to fall fast and far and hard. Not always, of course, but this “rule” is one that is good to keep in mind, because it is often true. Why You Should Know How Markets Move Knowing how markets move, their tendency to trend fast or slow, with [Read more…]
Just to support what I showed you in the video in the previous post (Finding Turn Around Points), I want you to see – it happened again today, and I took a 2 point trade off this signal. The two green arrows show the signal. The ES dropped to the support line (top green arrow) and the TICK dropped below -700 (bottom green arrow). I took a long at 1715.75, for 2 points. If you traded 10 contracts, and took that trade, you’d profit $1000, minus commissions.
One of the hardest tasks when looking for a good trade is to find where the market is going to pull back or reverse. If you want to day trade the S&P emini contract, the video below shows a very good method to find some of these points.