Wednesday, March 31, 2010

Anticipating Slow, Range Trade

You don't get markets much more range bound than this! The low 1170 area has been strong resistance for stocks (ES futures, above), and we've seen support in the 1160 region.

My earlier point regarding defining effective price targets was that using the prior day to estimate today's volatility can be quite useful. In the case of recent trade, seeing the shrinkage of daily trading ranges (and volume) could have helped traders anticipate the limited market moves and place stops and price objectives accordingly.

My next post in the price target and volatility series will offer specific (and new) guidelines for traders.


Thomas Haynie said...

Thanks Dr. Brett. I made a nice profit today buying ES at the lower end of the range and selling it and we approached the high end.

simple money methods said...

RE: the post at 7:46am, did i miss the Bonus? I stepped out for lunch so I am not sre if you had posted it and then removed it (after all you did say it wouldn't be up for long). Oh, that 247 Wallsteet listing. WELL DESERVED!!!

DMK said...

Dr - you say you would adjust stops based on the volatility, I'm assuming loosen them? but why dont you just stay out of the markets so you dont get chopped around??