Overnight Overview 12/19/14

Thursday was another strong day for the market. But there was some disagreement among our indicators as to whether that strength would carry through the night. Below is a look at the Odds Sheet as it stood near the close.

2014-12-19 image1

There was not much color on the Odds Sheet. Only NQ met the Overnight Edges standard minimum criteria for a possible trade. It’s Odds were bullish. ES is what I trade, and its Averages were closer to breakeven. A closer look at the Averages will show you that Price Action was extremely weak while Seasonality was extremely strong. A special report was sent out to subscribers that detailed some of the Seasonality numbers a little further. Additionally, the EdgeFinder showed two bullish, and one bearish study. So there was quite a mix in the evidence and the minimum Odds that I generally require in order to trade were not met. So as I typically do under such circumstances, I sat out.

It was a back-and-forth night, with strong moves in both directions, but in the end Seasonality won out. ES managed to gap up this morning 3.25 points. It certainly has been an interesting market lately. I expect we will see more interesting edges emerge for overnight traders in the weeks to come.

Good luck if you trade tonight, and rest easy!

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/18 – How I Avoided A Huge Loss

The market rallied strongly on Wednesday. The overnight outlook was not so bright, though. Let’s first take a look at the Odds Sheet and then I’ll discuss how I avoided a big potential loser.

2014-12-18 image1

Odds for most index securities we track were near breakeven. But ES, which is what I trade, showed some bearish odds. Its Averages were highlighted in orange because it met the Overnight Edges standard minimum criteria for a possible short trade. Additionally, there were three EdgeFinder studies suggesting a downside edge. On the surface, this would appear to be enough to compel me to take an overnight short position. But I decided against it for a few reasons. First, ES was alone on the Odds Sheet in meeting the minimum short criteria. No other index securities were providing confirmation. Secondly, as I mentioned on the Trade Discussion Room notes widget, when directly coming off of an intermediate-term low, risk is typically elevated for short positions. And the last reason I cited was that late December seasonality is very bullish. (I showed this yesterday afternoon in the blog.) So with these three things in mind, I decided that risks seemed high and the overall outlook was probably less bearish for the overnight than ES Odds were showing. Therefore, I elected to sit out.

And boy was it a good thing I did sit out! ES gapped up this morning 26.75 points. That is a whopper of a gap, and certainly one that I am glad I am not on the wrong side of. Last night is a prime example of why I try and take all relevant evidence into account when making a trade decision.

Good luck if you trade tonight, and rest easy!

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Santa Claus Comes At Night!

This time of the year is well known for its strong seasonality. The “Santa Claus Rally” was coined by Yale Hirsch many years ago and it refers to the last 5 trading days of December and the 1st 2 of January. I’ve broadened it some for the studies below, which show performance from the close on December 17th (or the 1st trading day after the 16th if a weekend gets in there) through the close of the 1st trading day of the year. The study goes back to 2004, because the tendencies have been especially pronounced over the last 10 years. Let’s first look at daytime returns during this seasonal period.

2017-12-17 image3

The numbers here don’t seem to suggest any substantial upside edge. In fact, while there has been a small amount of gains over time, less than half the days have seen the market rise from open to close. Below is a profit curve.

2014-12-17 image4

This is as choppy and inconsistent as you might expect given those numbers. While last year was good, it does not appear daytraders should be counting on Santa to provide a bullish intraday backdrop.

But now let’s look at what has happened overnight during this period.

2014-12-17 image5

Over 70% of the nights during this time of year have gapped higher in the last 10 years. And with the average up gap larger than the average down gap, gross gains have outsized gross losses by over 3x. Below is a profit curve.

2014-12-17 image6

This is a pretty impressive curve. Like ‘most every kid knows, Santa comes at night.

Rest easy.

 

Note: The above is an excerpt from a special report that was provided to subscribers yesterday afternoon. The special reports breaks the numbers down even farther. It is available to all subscribers, including trial subscribers, on the Special Reports page in the Subscriber Area.

 

Want research like this delivered directly to your inbox on a timely basis? Sign up for the Overnight Edges Email List.

Overnight Overview & Another December Win

Tuesday saw another failed bounce attempt, but it also saw another group of substantial upside edges emerge. Below is a look at the Odds Sheet as it stood near the close.

2014-12-17 image1

All eight index securities that we track met the Overnight Edges standard minimum criteria for a possible long trade, and saw their Averages appear highlighted in green. Such confluence is typically a good sign. Additionally, the EdgeFinder identified several studies, all of which suggested a bullish overnight edge. So for the second night in a row, it was a pretty obvious decision for me to take a long trade. I did so just before the close and was filled at a price of 1965.75. With the Seasonality Up Gap % coming in greater than 55%, that meant I would be trying for X Target rather than the smaller, standard Target Amount. I also indicated I might trail a stop during the night once ES got close to its smaller, standard target. You can see how the night played out on the chart below.

2014-12-17 image2

Things looked good from the start. ES spent most of the night rallying. A little after 7 AM it reached a high of 1981.25. This was above the lower, standard target, and it caused me to raise my stop to about breakeven. My error came later in the morning after I was awake. Sometimes I will look to tighten stops in the last half-hour leading up to the 9:30 AM open. At 9 AM there appeared to be a few levels of support between 1973.00 and 1970.00. So I decided to raise my stop to just under 1970. This caused me to get shaken out a little after 9 AM. ES did not greater but instead rebounded a little but and opened at 1971.50 at 9:30 AM. In this case, I got a little too cute with my stops, and the market smacked my hand and made me miss out on another 1.75 points. Hopefully most of the traders in the room managed it a little better than me and were able to take even greater profits.

It’s been a busy month so far for my overnight trades. As I have mentioned before, perhaps my favorite aspect of overnight trading is that my results have been largely uncorrelated with other strategies I employ. While December has been a tough month for many traders, it has been a strong one for many applying an overnight approach similar to the one I share here. And as I will show in an upcoming post, the 2nd half of December is the part of the month that overnight traders have had strong opportunities historically.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/16 – How I Managed To Post A Nice Longside Gain On A Night The Market Declined

Monday started off with a bounce, but like every other attempt in the last few days, the bounce failed and the market sold off in the afternoon. The action did generate some strong edges for overnight traders, though. Below is a look at the Odds Sheet as it stood near the close.

2014-12-16 image1

Six of the eight index securities we track met the min criteria for a possible long trade. And the two that didn’t still showed modestly bullish Odds. ES, and its ETF counterpart, SPY, both strongly exceeded the Overnight Edges standard min criteria of an Avg Up Gap % > 55% and an Avg Profit Factor > 1.30. Additionally, there was a large number of EdgeFinder studies that triggered, and they all suggested an upside edge. So there really was no choice for me. The evidence provided a consistent & compelling story. There were plenty of reasons to enter a long trade, and nothing suggesting I sit out. So I went long near the close.

As you can see on the chart below, my entry was not very good. I put in a limit price just below where ES was trading with about 30 seconds left until the close. I was filled almost immediately, and ES dropped another 3.25 points in those last 30 seconds. I decided to set my stop and target using the standard stop and standard target amounts as calculated on the Odds Sheet. But with my three points of slippage, I had to adjust slightly. Stops and targets are generally calculated from the last trade, which was 1982. I will sometimes use my entry price instead. In this case, I decided to use a number in between entry and last trade. You can see how the night played out in the chart below.

2014-12-16 image2

The target I chose was a fortunate one. After being filled at 1985.25, I elected to go eight points above there and placed my target at 1993.25. ES wriggled back and forth for much of the night. Just before 6 AM EST it reached as high as 1994.00. I was sleeping at this time, and took profits at the 1993.25 level where I set my target. Shortly after reaching those highs, ES collapsed over 30 points during the next 90 min. It recovered some of that by the open, but still opened Tuesday at 1972.75, which was 9.25 points below the last trade on Monday.

So despite the overnight not working out as the Odds suggested was likely, by using a target price, I was still able to realize a nice gain. Stops and targets are not an exact science. Sometimes you get lucky. Sometimes you don’t. But I believe the luck generally evens out over time, and if you trade with a quantifiable edge, long-term gains are achievable.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/15/14

The market took another beating on Friday. But it left overnight traders with some interesting edges to consider. Below is a look at the Odds Sheet as it stood near the close.

2014-12-15 image1

Three of the eight index securities we track met the Overnight Edges standard min Odds for a possible long trade. These did NOT include ES, which is what I trade. It also did not include its ETF counterpart, SPY. But both of them were very close. The Avg Profit Factors were very strong, but the Up Gap %’s just missed the 55% min threshold. There were several EdgeFinder studies suggesting a strong upside edge. And when I examined them further in the Trade Discussion Room along with subscribers, the bullish edges appeared even stronger. So it was extremely tempting to take a long position. But ultimately I decided to play it conservatively. This market has been prone to large gaps down lately, and with my min Odds criteria not being met, I decided not to get aggressive. Therefore, I sat out.

As it turned out I was kicking myself a little bit for that. ES reached its 9 point target by 10:30pm EST on Sunday night. So it would have made for a quick win. And those that might have traded the ETF or elected not to use a target would have realized even greater gains, as ES gapped up 16.25 points at the 9:30am open on Monday. But while missing out on last night was disappointing, December tends to offer more overnight trading opportunities than other months – especially in the 2nd half of the month. So I suspect there will be more chances to profit between now and the end of the year.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/12

Thursday saw the market gap up and move strongly higher before giving away most of those gains in the afternoon. In looking at the overnight evidence, it was mixed. Below is a peek at the Odds Sheet as it stood near the close.

2014-12-12 image1

The Odds Sheet showed some green, with NQ, QQQ, and YM all meeting the Overnight Edges standard min criteria for a possible long trade. But ES, which is what I trade, did not. Additionally, the EdgeFinder identified a number of bearish studies suggesting caution. So as I do when messages are largely mixed, I sat out.

As it turned out, it was a good thing I heeded the danger signs, as ES gapped down 10.75 points to open the day on Friday. I’ll be back shortly with an update from the weekend.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/11 – A Nice Win

The big move south on Wednesday triggered some substantial edges for overnight traders to consider. Below is a look at the Odds Sheet as it stood near the close.

2014-12-11 image1

Four of the eight index securities we track met the Overnight Edges standard min Odds criteria for a possible long trade. This included ES, which is what I trade, as well as its ETF counterpart, SPY. And even the securities that did not meet the min criteria came pretty close. Additionally, there were several EdgeFinder studies that pointed bullish. So I took a long position in ES near the 4:15pm close on Wednesday.

I was filled at 2026.25. I used the Standard calculated Stop of 14.25 points and set my target at the standard 6.50 points. If Seasonality comes in over 55% I generally look for the larger X Target. But with Seasonality fairly neutral the Standard Target is the one I look to use. The chart below shows how the night played out.

2014-12-11 image2

ES barely pulled back at all during the night before it went through the target and filled me just before 3:30am at 2032.75 for a 6.50 point gain. After some up and down it opened at 9:30 at 2033.25. So whether someone used a target or not did not matter much. Of course not all trades work out this well, but it is nice when they do.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overviews 12/8-12/10

Finishing up on my Overnight Overview catch-up this morning. Below are the Odds Sheets from 12/5, 12/8 and 12/9.

2014-12-08 image1

2014-12-09 image1

2014-12-10 image1

All 3 days showed just a small amount of green on the Odds Sheet. And ES, which is what I trade and tends to be my primary focus, saw Odds near breakeven each night. As it turned out, all 3 nights were followed by gaps down, so I was relieved to be sidelined. Wednesday night did bring about some action. I’ll post about that next.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/5 and why I did not take this small winner

Thursday 12/4 was an interesting day for overnight traders. There was quite a bit of evidence to take into consideration when deciding on whether or not to take an overnight position. Let’s start by taking a look at the Odds Sheet as it stood near the close.

2014-12-05 image1

The Odds Sheet looked pretty strong. Both ES and NQ were meeting the min long criteria. Part of what made it look strong was the Seasonality numbers, and they were partially thanks to the Employment Night hot streak over the last few years. But Employment nights are not my favorite for trading. And I rarely trade them unless evidence is overwhelming. That is because the news is released in the pre-market and the reaction is often very volatile – adding risk to the overnight trade. Additionally, Thursday was the 1st down day from an intermediate-term high. I am often wary about going long the 1st down day. I have found that trapped bulls will rarely be let off the hook easily, and so I will often stand aside on such nights even if the Averages meet my minimum criteria for a long trade. So even though this appeared to be a “valid” setup, and one worth consideration, it was just too rtisky for my taste. So I sat out.

As it turned out it hardly mattered. ES gapped up a mere 0.75 points on Friday morning. So I missed out on very little.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview 12/3 & 12/4/14

I’ve been on the run the last several days, so I need to catch up quite a bit with the overnight overviews. I’ll get a few posts done today. Unfortunately, I missed grabbing the 12/2/14 Odds Sheet for posting. But it was all-white and did not suggest a strong edge, and I did not take a trade that night anyway. Below is a look at the Odds Sheet as it stood near the 12/3/close.

2014-12-04 image1

The Odds Sheet was mostly white , with NQ being the lone index security that met the Overnight Edges standard min criteria for a possible long or short trade. ES is the security I trade and it was not showing any strong inclinations. Price Action, Internals, & Seasonality were mixed and the Averages came out pretty close to breakeven. So as I do when evidence is weak, I avoided an overnight trade.

As it turned out ES gapped down 2.75 points on 12/4. So I was happy not to be in a long position that night.

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.

Overnight Overview & An Easy Monday Night Win

Monday saw some strong selling as the Monday after Thanksgiving has been prone to in the past. The strong action also generated some strong numbers, as can be seen on the Odds Sheet below.

2014-12-02 image1

Four of the eight index securities we track met the Overnight Edges standard minimum criteria for a long trade. That is why their Averages were highlighted in green. This included ES, which is my primary overnight trading vehicle. In addition to the strong Odds, the EdgeFinder identified 5 different studies that all suggested a bullish overnight inclination. These were a mix of Price Action and Seasonality-based. So there was a strong and consistent message pointing towards a likely gap up this morning. Therefore, I decided to go long at the 4:15 EST futures close.

I will filled at 2050.75, which was also equal to the last trade of the session. I decided to use the “loose stop” since the Standard Stop was fairly small. When the Seasonality Up Gap % > 55% then I typically go for X Target, rather than the standard target. Seasonality was not that strong for ES. But it was for NQ and one of the EdgeFinder studies suggested the Seasonality Odds could be understated. So I decided I would use a target between the standard and X amounts. I settled on going for 5 points (and indicated that to subscribers).

As it turned out it was a fairly easy win. ES only dipped briefly early in the evening. Then it worked its way higher, and shortly after 2am EST it reached my 5 point target and filled me at 2055.75. It got as high as 2059.00, which is 1 tick above the X Target amount for those that might have gone for more. But it could not remain that high. At the open this morning ES gapped up just 2 points. So using any target between the standard and the X would have yielded better results than holding until the open today. But even holding until the open was worth a small gain.

Good luck if you trade tonight, and rest easy!

 

Overnight Edges was recently named one of the Top Trading Rooms by Dean Handley in Futures Truth Magazine!  Check out the full article here.

New to the Odds Sheets? Check out this video for a detailed explanation.

Get Overnight Overviews and other blog posts delivered via email - join the Overnight Edges mail list.