MARKET MECHANIC BIG PICTURE REPORT, BROUGHT TO YOU BY ODYSSEY TRADING GROUP FOR 12/18/ 2012

Welcome to theMarket Mechanic daily blog

TODAYS TALLY: $ 675.00 +       

TODAYS ACTION: The Fiscal Cliff rumor mill was in full swing today and apparently the news was good. The market initially continued yesterday’s late afternoon rally. The momentum was also good with ADX peaking with a plus 65 reading. Our software and system generated 4 profitable buy signals and one buy signal that was covered for a 10 tick loss. The losing trade was brought about when the market entered into an overbought condition and a profitable sell signal was generated as the market traded out of this overbought condition. The market traded sideways until breaking out to the upside. The software and system generated 2 profitable buy signals before the late afternoon upside breakout.

The tallyis determined is by taking the trade at the closing price of the 5 minute bar when the software and system generates a trading signal. We will trade 3 contracts per signal with the profit goal of 4 ticks or 1 point per trade. This profit goal is a minimum.  The system will employ a 4 point disaster stop or a loss can be booked when the software and system generates a trade that would reverse our outstanding position. There will be times when the software and system generates what can best be called overlapping trading signals, in this case there will be only one trade booked.

TODAYS SIGNALS:

8:40 AMbuy signal emini S&P price 1427.50. On the 5 minute chart, the set up; with the 5 and 20 minute  DTI’s and 5 minute MACD all with positive readings, in conjunction with a plus 25 reading of the ADX on the 5 minute chart, the trigger, the first cross of the 5 minute fast stochastic from negative to positive generates  a buy signal. Subsequent high: 1443.00

9:15 AMbuy signal emini S&P price 1428.00.  On the 5 minute chart; the set up, with the 5,10 and 20 minute DTI’s all reading positive and a positive 5 minute MACD, the trigger; on the 5 minute chart a yellow neutral bar is followed with are bullish green bar, a buy signal is generated. Subsequent high: 1443.00.

9:20 AMbuy signal emini S&P price 1428.50. On the 10 minute chart, the set up; with the 5, 10 and 20 minute DTI’s, 10 minute Chaikin oscillator and 5 minute MACD all with positive readings, in conjunction with a plus 25 reading of the ADX on the 5 minute chart, the trigger, the first cross of the 10 minute fast stochastic from negative to positive generates buy signal. Subsequent high: 1443.00.

11:35 AMbuy signal emini S&P, price 1437.50. The set up; with the 10 and 20 minute DTI’s both with positive readings and an above 40 reading on the 5 minute ADX  indicating the market is in a strong up trend, with the cross of the 5 minute DTI from negative to positive a buy signal is generated. Subsequent high:1443.00    

1:15 PMbuy signal emini S&P price 1441.25.  On the 5 minute chart; the set up, with the 5,10 and 20 minute DTI’s all reading positive and a positive 5 minute MACD, the trigger; on the 5 minute chart a yellow neutral bar is followed with are bullish green bar, a buy signal is generated. Subsequent action: covered for a 10 tick loss.

1:25 PMsell signal emini S&P price 1438.75. The set up; on the 10 minute chart the DTI and the TI agg both have negative readings, the trigger; when the 5 minute MACD, 5 minute DTI,  5 minute RSI and the 5 minute Chaikin Oscillator all align negative, a sell signal is issued. Subsequent low: 1437.00.

1:45 PMbuy signal emini S&P price 1438.75.The set up; on the 20 minute chart with the TI agg reading above 50 and the 20 minute RSI reading above 50 and the 10 minute DTI and 10 minute DMI with a positive readings, the trigger; on the 5 minute chart when the DMI crosses  from negative to positive a buy signal is generated. Subsequent high: 1443.50.

2:40 PMbuy signal emini S&P price 1439.75.The set up; on the 20 minute chart with the TI agg reading above 50 and the 20 minute RSI reading above 50 and the 10 minute DTI and 10 minute DMI with a positive readings, the trigger; on the 5 minute chart when the DMI crosses  from negative to positive a buy signal is generated. Subsequent high: 1443.50.

AFTER THE CLOSE: The DTI’s and The TIndexes on all time frames from the 5 through the 60 both finished the day positive. Normally these readings scream buy, but we have a yellow flag. The yellow flag being raised is divergence on several indicators. Divergence is the market putting in new near term highs but indicators are not putting in new highs in conjunction with these market highs. In this case it is several on different time frames. The Chaikin oscillator and the DTI’s are exhibiting divergence on the 10 through the 60 minute time frames. Also of note on the 20 minute chart the MACD closed negative, even though a new daily high was put in shortly before the close. This divergent condition will have to be resolved and that means a sell off.

TODAYS CHART:

ABOUT THE MARKET MECHANIC:

The Market Mechanic has developed 3 proprietary indexes and oscillators: the Trend Index Aggressive (TI agg), the Delta Trend Index (DTI) and the Trend Index (TIndex).  These 3 proprietary indicators combined with the Directional Movement Index (DMI), the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) give us over thirty, high probability set ups that are used to day trade the emini S&P market. These indexes and oscillators are applied on time frames from 5 minutes to 60 minutes (5, 10, 15, 20, 30, 45 and 60) and these set ups are traded on all time frames. The final product of the combination of these proprietary and non proprietary oscillators and indexes is a mechanical system and methodology for identifying entry points into the market that completely sidelines emotion and allows its user to concentrate on the money management part of the trading equation.

The philosophy of the Market Mechanic is not to predict the market but to anticipate likely market scenarios that the market will produce on a daily basis and the best way to exploit these opportunities. These set ups are designed to profitably and consistently exploit these market scenarios.

Markets are opportunity generating machines; our software and methodology strive to take advantage of these opportunities as they arise and provide its users a consistent and reliable profit making trading set ups.