Overnight Overview 10/23/14

After running up the previous few days, the market pulled back a bit on Wednesday. This made for some interesting decisions for overnight traders. Below is a look at the Odds Sheet as it stood near the close.

2014-10-23 image1

SPY, QQQ, and NQ all finished with their Averages highlighted in green. This meant that they met the minimum criteria for a possible long trade. ES is what I trade, and it JUST MISSED. An Average Profit Factor of > 1.30 is required and it came in at 1.27. But it also missed by 1 point and less than 30 seconds. Price was moving fairly quickly in the 15 minutes between the 4pm NYSE close and the 4:15pm futures close. If ES closed at 1924.75 or lower its Price Action Odds would have come in higher, and it’s Averages would have met the minimum long criteria. I noted this in the trade discussion room and on the notes page. The EdgeFinder came up blank, so there was no confirming evidence there to push me over the edge. We looked at a number of different things in the Trade Discussion Room, but did not identify anything suggesting a strong edge in either direction. I determined that if ES closed less than or equal to 1924.75 then I would look to go long overnight. It was trading there with less than 30 seconds to go, but a late surge took it above my range. Since my minimum criteria was not met, I sat out. There were some NQ traders in the room that elected to take a long trade in NQ overnight.

As it turned out, it was unfortunate that my entry was missed. ES put in a strong move overnight and opened this morning with a gap up of 15.50 points. NQ traders would have really made out well as NQ gapped up 31.75 points this morning. Near misses like this can be frustrating and disappointing to miss out on. But near misses happen in both directions. Sometimes they work out, and sometimes they don’t. For me, it is simply a matter of making sure I take trades when the edges are strong, and avoid trades when edges are dull.

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.

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Overnight Overview 10/22 & A Very Small Winner For Me

Tuesday saw nice gains for the market, as it continued to bounce strongly off the lows made last week. But the overnight outlook did not appear bullish. Below is a look at the Odds Sheet as it stood near the close.

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Quite a bit of orange appeared in the Averages column. Orange highlight means that security is meeting the minimum criteria for a possible short trade. ES is what I trade, and it was one of the securities suggesting a short side edge. A look at the EdgeFinder showed just one study triggering. It supported the idea of a likely selloff overnight. I did not see any evidence that contradicted what the Odds Sheet was saying. And closer examination of the Odds Sheet showed that even those index securities that did not meet the minimum criteria still favored the short side. Therefore, I decided to short ES as it approached the close.

My fill was not great as I entered a few seconds early. I ended up getting short at 1937.75. The last trade was a half point above there and the settlement price was 1938.00. The night again saw a lot of back and forth action. This can be seen in the chart below.

2014-10-22 image1

For most of the night my position was profitable, but there were some spikes higher that put it under water. The last spike came around 30 min. before the 9:30 AM EST NYSE open. With about 6 1/2 min. to go until the open I got sick of the roller coaster and decided to exit with a one tick profit at 1937.50. My fill there was pretty good. ES opened a few minutes later at 1938.25. That was breakeven with the final trade near 4:15 PM on Monday, but was above the settlement price by 0.25 points. Traders that took this trade last night probably did not make or lose much money regardless of exactly where there fills were.

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.

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Overnight Overview & Why I Passed On This Potential Short Trade

Monday saw some strong upside follow through after Friday’s rally. And as we reached the close the strong action showed some signs that the night could be weak. Below is a look at the Odds Sheet as it stood at the close.

2014-10-21 image1

As you can see, most of the Odds Sheet was white, but ES met the min criteria for a short trade. It was alone though. There were no other index securities meeting the min short criteria, and there were no EdgeFinder studies suggesting a short-side edge. Additionally, there was nothing we explored in the Trade Discussion Room that showed a consistent edge either. So with the setup seemingly borderline and the market especially volatile, I elected to stand aside.

The night turned out to be a wild one. Futures traders that used the Overnight Edges target amount could have made out well. The 12.23 point target was reached as ES declined as much as 14.50 points during the night. But it bottomed out in the middle of the night and staged a strong rally. In the end it gapped up 10.75 points. This would have hurt traders not using a target or perhaps trading an ETF.

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 10/20/14

Friday saw the SPX put in its first strong up day in a while, but the indices were mixed with the Russell actually losing ground. As we approached the close, overnight evidence did appear consistent or compelling. Below is a look at the Odds Sheet as it stood near the 4:15pm futures close.

2014-10-20 image1

SPY showed some strong upside inclinations, but it was all alone. ES Odds leaned bullish, but not enough to meet the Overnight Edges standard min criteria for a long trade. The EdgeFinder showed mixed evidence, with both bullish and bearish studies appearing. In other words, no consistent message. Therefore, as I do under such circumstances, I sat out.

The overnight was a volatile one. After trading up over 11 points during the night, ES tumbled during Europe’s trading and ended up gapping down 5.75 points Monday morning. NQ also gapped down, but just 2.25 points.

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 & How The Odds Helped Me Realize My Largest Overnight Win In Years

Thursday saw the market basically breakeven. So people that don’t monitor the market during the day probably thought not much happened. In fact, it was another very volatile day which started with a gap down of 22 points for ES and ended with a small gain. When it was done, the Odds Sheet looked like this.

2014-10-17 image1

Four of the six index securities we track met the minimum criteria for a possible long trade, and saw their Averages highlighted in green. This included ES, which I trade, its counterpart SPY, and two other futures contracts. Meeting the minimum long criteria meant that I was open to considering a possible overnight trade. The EdgeFinder did not provide any conflicting evidence, but it showed up blank and failed to provide confirming evidence. Seasonality look very good, and I sent a special report to subscribers that broke down those seasonal numbers a bit further. The report supported the numbers shown on the Odds Sheet. So with ES green, no conflicting evidence, and some other index securities also showing bullish odds, I elected to take a long position overnight. When Seasonality is strong, I typically use the X Target. Volatility has been sizable so both the stops and targets shown on the odds sheet were much larger than usual. Therefore, I determined I would use the standard stop, calculated at 28 points, and the X Target of 32 points.

The night was a terrific one for overnight traders, and though my 32 point target wasn’t quite reached, ES did managed to gap up 27.75 points overnight. I made just shy of that, with a 27.50 point gain. NQ traders would have done extremely well also, as that gapped up 62 points Friday morning. The 27.50 point gain was the largest overnight win I have had since opening Overnight Edges a couple of years ago. Recent volatility has been a bit scary. But with trading it is important to have the fortitude to take trades when strong edges reveal themselves as they did Thursday afternoon, even if the market does appear somewhat scary. All trades obviously don’t all pay off like this, but it is nice when they do.

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 10/16/14

Wednesday saw strong losses for the market and continued volatility. It also offered mixed and some unusual Odds. Below is a look at the Odds Sheet as it stood near the close.

2014-10-16 image1

The Odds Sheet provided some interesting readings, with two of the eight index securities we track having their Price Action Odds appear highlighted in yellow. The yellow highlight means that instances used to calculate those Odds were very low. And in the case of DIA, its readings were so unusual that there was nothing to compare it to over the last 10-12 years. The Averages column showed some green, but ES Odds were not strong enough to meet the minimum long criteria. In a volatile environment such as this I have no interest in taking on trades where the minimum criteria is not met. So I sat out.

In this case, sitting out was a very good decision, since ES gapped down 22 points to start the day on Thursday.

Thursday night was even more interesting, and I did take an overnight position. I will discuss that in my next post.

 

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 10/15/14

Day or night, this is a wild environment we are currently in. And Tuesday was another day of wild swings. But the overnight Odds were not so wild. Below is a look at the Odds Sheet as it stood near the close.

2014-10-15 image1

QQQ showed strong Odds, but it was alone. Nothing else met the Overnight Edges standard min criteria for a possible long or short trade. ES is what I trade and its Averages were very close to breakeven. The EdgeFinder showed a small hint of an upside edge. In a volatile environment, I need way more than a small hint to put capital at risk. So it was an obvious decision for me to sit out. With evidence so weak, I don’t know of any traders in the Trade Discussion Room that took a position overnight.

And it was a good night to be sidelined. ES gapped down 29.00 points this morning and NQ gapped down 66.50 points.

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 10/14/14

Selling did not relent on Monday. The major averages all fell again. And the overnight showed some evidence of a bounce. Let’s take a look at yesterday’s Odds Sheet and I’ll discuss my decision.

2014-10-14 image1

Once again it was a split decision among the index securities we track. Four of the 8 met the minimum criteria for a long trade. Unfortunately, ES and SPY were not among them. The EdgeFinder showed some compelling studies but it was not enough for me to override the weak Odds in a high-risk environment. So I sat out again. There were some more aggressive NQ traders in the room that elected to try and take advantage of the strong NQ Odds.

As it turned out it was a good night to be long. ES gapped up 13 points this morning and NQ gapped up 30.25 points.

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 10/13/14

Friday was another day of selling, and the week turned out to be the worst one in over 2 years for SPX. Strong action often creates strong edges. That was partially the case, and it made for another interesting decision. Below is a look at the Odds Sheet as it stood near the close.

2014-10-13 image1

A few of the index securities we track were meeting the minimum criteria for a possible long trade. This is why their Averages columns showed up highlighted in green. But ES is the one I trade and also the one I pay closest attention to. Like Thursday afternoon, its Odds were mixed. Internals were clearly strong, and Seasonality was a little weak. But also like Thursday, Price Action showed mixed results, with a decent Up Gap %, but a low Profit Factor. This suggests a good chance of a gap up, but if it doesn’t happen things could get wild. The EdgeFinder was strongly bullish, with 5 studies appearing supporting the bull case. But that still was not enough to compel me to override the min Odds and take on the potential risk associated with this “wild” Price Action.

And the weekend certainly showed wild price action. On Sunday ES traded down nearly 14 points from its Friday settlement price. But it started rallying a little after midnight. At its high point it was more than 20 points off its nightly lows. In the end ES opened with a gap up of 4.50 points. So more aggressive traders would have been paid, but not without some angst beforehand.

The market has given no indication of becoming less interesting. And opex this week might just lend more support to the volatility. Potential rewards and risks will be high, so I’ll be taking careful looks at the Odds and the studies. If they meet the min criteria and line up nicely, I won’t hesitate to trade. But it is very unlikely that I will take a borderline setup in this environment.

Good luck with your trades, 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 10/10/14

The market suffered some very strong declines on Thursday. As far as Odds for Thursday night, that led to a mixed bag. Below is the Odds Sheet as it stood near the close.

2014-10-10 image1

A few of the index securities we track were meeting the minimum criteria for a possible long trade. This is why their Averages columns showed up highlighted in green. But ES is the one I trade and also the one I pay closest attention to. Its Odds were mixed. Internals were clearly strong. And Seasonality was clearly weak. But Price Action was not as clear. The Up Gap % was 57.69%, meaning a good number of instances with similar price action had gapped up in the past. But the Profit Factor was just 0.952. Anything under 1 means net overnight returns under those circumstances were negative. So although the chance of a gap up was pretty good, it was a risky setup. Gaps down had been powerful. And it tempered the Odds enough that they were not attractive. The EdgeFinder, on the other hand, did show some solid studies. But without the Odds meeting the min criteria, and especially with that dangerous Price Action bucket to deal with, I was not inclined to take an overnight position.

That turned out to be a good thing as ES opened with a moderate gap down of 3.50 points to open the day.

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 for 10/9/14

The market put in a strong move up on Wednesday. But some of our overnight indications suggested that follow-through strength was unlikely. Below is a look at the Odds Sheet as it stood near the close on Wednesday.

2014-10-09 image1

ES saw its Averages highlighted in orange. This means that it met the minimum criteria for a possible short trade. Additionally there were some EdgeFinder studies suggesting a downside edge. So there was a fair amount of evidence suggesting a short position. But I elected to pass.

When the market experiences a strong short-covering rally from an intermediate-term low, bears will get trapped. While many strong 1-day moves are over-reactions that correct some during the night, short-covering rallies like this have the potential to follow through overnight. Bears that were pressed all day will sometimes be pressed more overnight. They may not be let off easy and that could mean a strong gap up the next day. So when I am looking at a strong move from an intermediate-term low, I will often pass on potential short positions.

In this case the ES Odds and the EdgeFinder studies turned out right as ES gapped down 3.75 points to open the day. And with all the selling that has occurred throughout the rest of the day, tonight should be another interesting one.

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 for 10/8/14

Tuesday saw some big market moves. But the overnight setup looked a bit sketchy. Let’s take a look at the Odds Sheet as it stood near the close, and I’ll discuss what went into my decision yesterday afternoon.

2014-10-08 image1

The strong selloff Tuesday led to moderately bullish Odds for most of the index securities we track. I found the most interesting columns to be Price Action, rather than the Averages. As you can see, ES Price Action showed a % Profitable of 57.69%, but a Profit Factor of 0.952. This means that despite gapping up over 57% of the time under similar conditions, taking all those setups would have led to a net loss over time. And that is without commission even factored in. In other words, lots of small winners were more than offset by a small group of large losers. So when looking at ES Odds, Internals were the only ones that stood out as truly bullish. There were some bullish EdgeFinder studies. But with Price Action Odds suggesting a decent possibility of a sizable loser, I wasn’t going to bypass the min criteria and jump into a position. So I sat out.

The overnight was volatile, but when it was all over, it did not accomplish anything. ES opened this morning with a gap up of just 0.25 points. So trading or sitting out really did not matter.

I may be back a little later with some research for tonight.

 

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.