What can I tell you, ladies and gentlemen? The index Czar readings are still showing a downward bias. Perhaps theyâ,"ll keep doing so as the market continues to edge upward; many of the individual components are contrarian in nature after all.
Iâ,"m reminded of a quote given to me by Bill Kraigie, a CBOT metals trader, for my book â,"When Supertraders Meet Kryptonite.â, â,"Buy a creeper, sell a leaper.â, I subscribe to the axiom. A market can inch higher until your head spins around. Unfortunately, to date, I have been unable to qualify the phenomenon into anything mechanical.
One thing that would negate the â,"creepingâ, nature of the up move, of course, would be a sharply higher gap opening. You have a chance to see that tomorrow when the producer price index is released. (Actually, youâ,"ll be seeing 7:30 reports pretty much all week long.) Iâ,"ll reiterate: Iâ,"ve run tests that have affirmed that a gap higher opening significantly increases the chances that youâ,"ll see a down close.
There is something else. I have been partially short the S&Ps for days. My full commitment to the short side would involve entering x number of points lower than the opening on a stop. For days now, the setup has been possible (different numbers each day), but the execution hasnâ,"t materialized. For Tuesday, the number is -275. That number subtracted from the 8:30 opening is where Iâ,"ll be adding to my battered existing shorts.
Either-Or Biases
The first set of biases includes six biases that individually signal either long or short on a daily basis, except for the rare tie. Each bias has a +1 value for long bias, and a -1 for short. The bottom line is the sum total, which can range from -6 to 6. Positive totals are bullish; negative are bearish. For bullish signals (opposite is bearish):
- The 2-day average is below the 5-day average.
- The close is above the 40-day average.
- The highest close of the last 50 days occurs before the lowest close of the last 50 days.
- The day's trading range is smaller than the 10-day average range and the day's close is higher than the 10-day average close OR the day's range is larger than the 10-day average range and the close is lower than the 10-day average close.
- The close is above the midpoint of the average 15-day range. (The 15-day high average plus the 15-day low average divided by 2.)
- Fade the majority direction of the last three open-to-closes.
Infrequent Biases
The five infrequent biases are listed below. For bullish signals (opposite is bearish):
- Four successively higher closes were followed by yesterday's down close. Today's action was irrelevant.
- Five successively lower closes were followed by today's up close.
- CUP trade. For the last three trading days, the middle day had both the lowest low and the lowest close. In addition, the low on the middle day must also be lower than the lows from the previous three trading days before the middle day. (CAP is the reverse and bearish.)
- The highest low minus the lowest low of the last three days is less than or equal to 20% of the highest high minus the lowest low of the last three days.
- For the previous two days, the market closed lower than it opened.
Calendar Biases
The calendar biases in the indexes are listed below. For a more in-depth explanation of these, click here.
Click here for the TradeStation summaries of all 14 futures biases.
DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented in this column will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented in this column are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
Art Collins is the author of Beating the Financial Futures Market: Combining Small Biases into Powerful Money Making Strategies. E-mail him at artcollins@ameritech.net.
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