Trading on Finals Day

Today the contracts switched over to march futures. Volume has dropped too low in the Dec contracts. This could be a difficult day for trying to take directional bets. Everyone is fairly sure that Greenspan will raise rates tommorow by a quarter point. But there is a possibility that I am missing something so instead of trying to scalp and possibly stepping in front of a train, I'm going to wait till 10 minutes after the open to see how the market is going to react.
Looking at trends, the bonds are in a down trend today but seemed to be fairly ranged for the last few days. If this range holds then the bonds should bounce up today. Stocks are ranged for about a week and if they are able to break those ranges they might be a good play. All in all, it seems as if scalping would be the best play.

After 10 minutes it looks like the S&P and Nas, are spiking upwards on fairly high volume, but I'm concerned because the dow is not following suit. I am cautiously going to play the indices long with tight stops. Bonds haven't moved, because of the range bound nature of the bonds I feel like the prices should go up slightly, so I will also play them cautiously long. (Cautious is the word of the day).

9:52, well cautious was a good play because nothing is moving enough to play a direction. I'm down 4,776.25, very disapointing open. The charts make me feel like the market is going to close the gap from last night so I'm going to try going short.
One thing that concerns me is after this change over to the new contracts, the simulator seems buggy. I usually only get a 5 deep market but on some contracts I'm now getting 10. We'll see if this effects performance.

Unfortunately my simulator is currently benig worked on by the provider which is causing some really weird price movements (not real movements). In hindsight though, I would've played better if I would've scalped the open. Possibly the day before big news comes out, scalping is a good move...Possibly

The S&P is in a beautiful down trend. Due to my simulator's weirdness I got stopped out of my bonds. I'm down 3860. I'm still inside of my 7500 level so I'm gonna make one more play. With the down trend in the indices I'm going to go short on up ticks and see if I can ride on this train.

The Nasdaq has been well ranged all day. During lunch time I will scalp them with an autotrader program.

I just finished my Computational Finance Final and left my positions in with stops. Closed out with an ice 1539.38 P/L thanks to the always range bound Nasdaq 100.

Mistakes made today: Foolishly took positions without confidence. Next time I will wait till I am confident in my decisions.

Well Played: Nasdaq scalping and tight money management brought me back from negative to a decent gain on the day.

Total Contracts: 379 round trips.

Defensive Success

Reading the Wall Street Journal this morning, their discussion of the treasury markets led me to believe that the treasuries would stay range bound until the FOMC meeting on the 13th. My original play was to fade any moves the bonds made. But, at 8:30 jobless claims were much higher than expected and consumer credit was down way more than expected. Both in my opinion signal the end of the economic expansion which would lead me to believe the FOMC will only raise the rates one more time. After this news the bonds have already increased but volume hasn't picked up yet so I will go long the bonds.

After the crushing blow the indices took yesterday and this good news in the bonds, I'm going to cautiously play the indices long. At 10:30 the Nat Gas EIA comes out and with the bitter winter coming the energy market has a strong grip on the stock market.

After starting out long in the indices I quickly got stopped out for a 3,000 dollar loss. Going into the EIA Nat Gas report I am learning from yesterday and going short the indices if there is a shortage of NG, but nothing if the the report if positive. I'd rather make a play on something that is going to effect the market than fade what is turning out to be a volatile market.

Something to note. I put in stops on the bonds within two ticks of my average price, assuming that the bonds don't move two ticks unless they are determined to go that direction. But an outsider came into the market and picked up my stop even thought the price didn't move. From now on I will keep my stops at 3 to 4 ticks to prevent this.

The bonds went up slightly and pulled back. The EIA report was as expected so I didn't play the Indices. After getting out of the bonds I made a poor 95.63, but I consider it a success because I learned from yesterday and kept my losses to a minimum.

Kent State MSFE 2006 

Big Winning Day

This is From December 6, 2005



Upon entering the trading floor this morning I noticed that the fixed income futures had jumped higher on news that the retail sales were lower than expected (Redbook yy and mm). This was interpretted as a possibility that the economic over expansion was slowing down and the fed might not raise rates after the obvious rate hike coming Dec 13th. This strength from the bonds seemed to trigger a rise in the index futures as well (based on timing). This was a signal that the two would be correlated today. Housing data came out around 10:00 which said that the housing market was decreasing softly, which was good news when added to the redbook from earlier.

Several days ago housing data came out showing that the market was still booming, which blew up the rates on bonds. With this new data, I looked back to see where the bonds were settled before first set of housing numbers. Bond prices had a long way to run before they got to that point. Stocks as well had similar distances to run up before hitting resistance areas.

After getting long I placed stop loss orders and checked to see if any more news would come out the rest of the day. No news was due so I let my position sit feeling very confident that rates would fall and the indices would shoot up.

Upon checking my position at 1:00 (I had to go to class for that 3 hour period). I was up $37,000. A record gain. The bond were off their highs and so were the indices. I tried to get out of them as quickly as possible to secure the profit. I got out of the indices quickly but had to go to class again before I could exit the bonds. I placed stop losses to allow them to run up more if they needed to. While I was in class the emini s&p according to Bob Pisani caused a huge decline in the market. Luckily I had my stops in place and was out of the indices. Upon completion I was up $30,000. (2nd best P/L so far this year).

Opposite Day

9:00 Review of charts and news of the day. Big news will be the US Challenger layoffs which will be a play for bonds and the eurodollar. The EIA report is going to have a big impact on the indices. The market seems to be flat before the open so I turned on a scalping autotrader program for the indices which I will turn off if the market makes a significant movement upon open.

The Challenger layoffs were up almost 25%, showing a slowing economy. I went long on the bonds (prices) and not only did the bonds not go up they went rather significantly down. After a $4,656 loss in the 30 I stopped out and re-evaluated my position.

Amazing numbers came out with the EIA report today. We had crude supplies coming out of our ears. I expected a HUGE rally in the indices, so I went long. Amazingly the Dow had a small miniscule rally and the S&P actually went down. Rick Santelli says this might affect bonds so I am going long on down ticks in the bonds hopeing to make some of the earlier move back. So far nothing has reacted to news the way I expected.

After a $10,000 loss I stopped out and quit for the day. Mistakes I made today: over reliance on news. Turns out the reason that the indices did not react to the EIA numbers was because cold weather reports were keeping natural gas prices higher which was keeping oil and gas prices from falling. As far as the challenger layoffs and the bonds, I still don't know why they didn't react.