Since leaving the trading floor at the Chicago Board of Trade I’ve been tethered to my desktop computer. My office is my workshop, and all the tools I need for trading market analysis are there. Since the futures markets virtually never close except on Saturday, the leash to my tools is short and therefore constrictive. My vacations have been limited to three maybe four days over the past decade and a half. Last week I was forced to adapt during a weeklong trip with the MTM team to Northern California.
I write newsletters every day and have for many years. I was nervous about this trip because I thought I might not be able to service my clients with daily market updates. I had to adapt. First there is a two-hour difference between Chicago and California so to get my newsletters out I had to get up very early in the morning. My alarm was set for 2:45 a.m. PST to release my morning updates.
I was able to publish my reports, but I had to adapt to a shorter version. To do that, I had to make a list of priorities to publish trade ideas with limited time and access to my tools in a suburb of Chicago.
I know what traders want from me. They need to know which direction to favor and where support and resistance levels are or levels to buy and sell.
If you have limited time to analyze markets, and most of us do, take these steps at the end of every day to prepare for the next.
First and foremost, check for event risk. That includes economic reports, earnings and supply reports if you’re a commodity trader. Fundamentals move markets, but if there are no fundamental data, we have to turn to technicals.
Next on the list is defining momentum. There are many ways and indicators to define momentum. My list includes these three intraday signals. The first is when the high or low of the day is made. If a high is made in the first hour of the day that indicates sellers are in control, and if the low for the day is made in the first hour that means bulls have the edge. The next indication of momentum is if the market extends higher after that first hour signaling bulls are in charge, or an extension lower after the initial hour indicates sellers have gained the advantage. The last direction indicator relates to what quadrant of the day range the market closed. A settle in the upper quadrant means bulls are in control and higher prices are likely the next session. Conversely, a close in the lower quadrant of the day range indicates that prices are apt to extend down the next day.
The last task in this abbreviated version of trading market analysis is to pick entry and exit levels or support and resistance areas. This is the toughest part and an art. Markets tend to reverse when they revisit old high-volume prices. They also tend to reverse when revisiting old very low-volume prices.
When time is restricted, and you have many markets to analyze, follow these steps to save time. More time away from your computer allows more time with family, hobbies and travel.
John Seguin
Senior Futures Instructor
Market Taker Mentoring, Inc.
