Every freely-traded market makes a series of turning points that tend to occur during the day session of the regional stock market. They can range in number from two to four, but about 80% of the time there are three: HI-LO-HI or LO-HI-LO. You don’t need to master complex cycle theories or pay to join some elite trading group in order to recognize and utilize daily turning points. I can teach you how to spot them and exploit them with conventional technical analysis.
Scoreboard
ES: 6 wins / 0 losses
Chart Chat
If you trade in the pre-market, keep track of the economic reports that come out each day. They can cause wild swings on the intraday charts. Today, the “Unemployment Rate” report came out at 5:30 am Pacific time. The country’s economic recovery, or lack thereof, is measured largely by the rate of unemployment. The news on this subject has been uniformly negative lately so I expected a bearish response to today’s report and I was not disappointed. But notice that before the market dropped, it spiked up. This may be the floor traders in the Big S&P creating a more advantageous starting point for the expected, subsequent drop. There was a one-minute candle that was 16 points long. First, price went up 8 points, then down 16. No matter which way you were trading you were bound to be stopped out – hopefully, only after your initial target was filled. If you’re not sure how the market will react to a report, the best bet is to wait on the sidelines. The markt usually calms down and gets back to business as usual within a few minutes.
Today’s 5-minute chart shows the more typical 3 turning points: LO-HI-LO. On the 3-minute chart, one could argue for 4 points. It could also be argued that we are seeing a bearish 5-wave impulse pattern. Notice how the MACD crossovers are in close proximity to the red, white and blue dashed lines that mark the average time when turning points tend to occur. Have a great Labor Day weekend. Be back next Tuesday.
Please click on the chart below to make it larger.
Today’s 3-Minute ES Chart
