| Posted in THE GATEWAY TO SHORT-TERM TRADING | Posted on
Market action spins off both internal and external Pattern Cycles. Swing traders must consider both
factors before executing their positions. The complex interplay of world markets works its way
downward into individual stocks and futures on a daily basis. But accurate prediction of the exact
impact during any given session requires a detailed understanding of macroeconomic forces and
arbitrage between different entities.
Consider the influence of the credit and futures markets before entering an equity position. A
sudden selloff in either of these exchanges can have an immediate effect on stock prices. Arbitrage
between equities, futures, and credit also leads to intraday oscillation that runs through all
exchanges. Observe this rhythmic movement on TICK registers and in the cyclical price swing that
runs through all major indices. Swing traders can use this well-known phenomenon to time
executions that synchronize with these larger forces.
Local influences change quickly from day to day. The markets constantly seek leadership. In the
absence of larger forces, that role can shift at any time from the S&P futures to Nasdaq to the Dow
30 Industrials. A major sector can suddenly move into the limelight and carry other markets higher
or lower with little warning. These fluctuations may or may not affect any individual position. The
swing trader must determine the potential impact quickly and shift strategy when required.
Cross-market influences shift between local and worldwide forces. During quiet periods, simple
arbitrage generates primary influence. But world events or broad currency issues may rise to the
surface and shock American markets. Always defend active positions by staying informed and
planning a safe exit in the case of an emergency. Avoid overnight holds during very volatile periods
and think contrary at all times. The best opportunity may come right after the crowd jumps for the
exits.
Follow the charts of the major indices and S&P futures on a daily basis. Intraday traders should
watch their real-time movement throughout each session. Keep track of the current bond yield and
identify major support-resistance levels. Identify market leadership as early in the day as possible.
Then use that price action to predict the short-term flow of the market. When a macroeconomic
event appears, consider taking the day off unless a clear strategy emerges to capitalize upon it.
Promising setups often fail badly on these days because they can’t find the crowd to carry them.
factors before executing their positions. The complex interplay of world markets works its way
downward into individual stocks and futures on a daily basis. But accurate prediction of the exact
impact during any given session requires a detailed understanding of macroeconomic forces and
arbitrage between different entities.
Consider the influence of the credit and futures markets before entering an equity position. A
sudden selloff in either of these exchanges can have an immediate effect on stock prices. Arbitrage
between equities, futures, and credit also leads to intraday oscillation that runs through all
exchanges. Observe this rhythmic movement on TICK registers and in the cyclical price swing that
runs through all major indices. Swing traders can use this well-known phenomenon to time
executions that synchronize with these larger forces.
Local influences change quickly from day to day. The markets constantly seek leadership. In the
absence of larger forces, that role can shift at any time from the S&P futures to Nasdaq to the Dow
30 Industrials. A major sector can suddenly move into the limelight and carry other markets higher
or lower with little warning. These fluctuations may or may not affect any individual position. The
swing trader must determine the potential impact quickly and shift strategy when required.
Cross-market influences shift between local and worldwide forces. During quiet periods, simple
arbitrage generates primary influence. But world events or broad currency issues may rise to the
surface and shock American markets. Always defend active positions by staying informed and
planning a safe exit in the case of an emergency. Avoid overnight holds during very volatile periods
and think contrary at all times. The best opportunity may come right after the crowd jumps for the
exits.
Follow the charts of the major indices and S&P futures on a daily basis. Intraday traders should
watch their real-time movement throughout each session. Keep track of the current bond yield and
identify major support-resistance levels. Identify market leadership as early in the day as possible.
Then use that price action to predict the short-term flow of the market. When a macroeconomic
event appears, consider taking the day off unless a clear strategy emerges to capitalize upon it.
Promising setups often fail badly on these days because they can’t find the crowd to carry them.
