Monday, January 29, 2007

Russell 1-29-07

The Russell opened with modest strength but quickly climbed higher into the 794.00 balance area continuing yesterday afternoon's late bullish activity.

First trade for the morning was at 6:35 long at 790.80 for +3.2 points. Once this trade got started, it was pretty obvious that it was going to take out the 794.00 level. Second trade was a break above 795.5 looking to continue the trend. Poor positioning on this trade meant -1.7.

Net on the day: +1.5
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Anonymous said...

may I ask what made you decide to go long at 790 ?

Lord Tedders said...

Well a couple different factors. First, this area had a strong bounce off of resistance at around 790.00 (I entered at 790.80). You can see this clearly with the blue dots on the chart I posted. Secondly, RSX turned up aggressively and had been nearly oversold. It was also clear that we were in a short-term uptrend which began Friday afternoon.

Most convincingly, however, was the market activity already being exhibited on the YM and ES (I tend to watch time and sales) and it looked like a market move was underway. Lastly, I chose 794.00 as a potential exit since it was a level of support on Thursday.

You can get a better idea of my methodology here.

The key of course is not to be a slave to the method but to "listen" to the market. The speed at which the market moves to fill an "imbalance" is in direct correlation to how powerful that move is.

This became clear on my second trade where the bulls spent nearly 10 minutes trying to break the next level and temporarily failing to do so. Eventually this would have worked out, but my stop got hit first.

Hope that helps.


Anonymous said...

Thanks for replying.
Your methodology is very impressive.

I am using RSI for RSX since
you mentioned that it is similar.
I can't find a period setting
that is similar to your RSX pattern. Also, your red and blue dots look like short term pivot lines.. anything you can recommend that is close to it?


Lord Tedders said...

Thank you for your kind words.

Secondly, let me say that for your sanity and mine, I STRONGLY recommend that anyone interested in this approach spend many hours trading this methodology with a demo account first. Please don't risk real money until you are comfortable with it. This is not an automated approach and discretion is a big factor in my decision making.

Now that the obvious has been stated, if you're looking for the blue and red dot indicator check here:

It should be in either August or September 2006 motherload. Thank Avery if you like the indicator since he put much hard work into it.

Second, I said that RSX is like RSI but that doesn't mean I would use RSI. The RSX indicator is made by Jurik Research to filter out noisy trades.

Just read about it here:

I'm honestly not sure what if any settings would be applicable on RSI because I do not use it. If you choose to, you'll need to use longer look back than RSX.

Hope that helps.