Nights After 2 Unfilled Gaps Down

The market is off to a rough start again today. ES has the potential to leave an unfilled gap down for the 2nd day in a row. This is a fairly rare thing to see happen, but is has often been followed by a gap up the next morning. This can be seen in the study below.

2015-03-04 image2

The stats here are impressive, with 24 of 29 instances gapping up the next day and gross gains 3.5x the size of gross losses. Here is a look at a profit curve to see how the edge has played out over time.

2015-03-04 image3

This appears to be a very appealing curve despite the relatively sharp dip in the middle. Traders may want to keep this study in mind as we approach the close this afternoon.

Good luck if you trade tonight, and rest easy!

 

 

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

Overnight Overviews 3/3 & 3/4/15

The last two nights have been quiet for me as an overnight trader. Let review. First, the Odds Sheet from Monday afternoon.

2015-03-03 image1

Monday was all-white, which as most readers know means that nothing was meeting the min criteria for either long or a short trade. The EdgeFinder showed 1 bearish study, but it wasn’t even close to compelling enough to get me to consider a trade. So as I basically always do with an all-white Odds Sheet, I sat out.

That was a good thing. The 1 bearish study played out and ES gapped down 4.50 points to open the day.

Tuesday was not much different. Here is a look at that Odds Sheet.

2015-03-04 image1

NQ and QQQ showed up green, but none of the other indices confirmed. ES was pretty close to breakeven. Additionally, I review some evidence in the Trade Discussion Room that showed that risks were elevate for both ES and NQ since they were coming off of 50-day highs the day before. So the decision to sit out was an easy one for me.

And it was the right one as ES gapped down 5.75 points this morning.

I’ll be back later with some research for tonight.

 

 

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 3/2/15 – A Mild But Disappointing Loss

Friday the 27th brought about some strong edges for overnight traders to consider. Below is a look at the Odds Sheet as it stood near the close.

2015-03-02 image1

The Odds Sheet Averages were all green. This meant that every one of the index securities we track met the Overnight Edges standard min criteria for a possible long trade. Additionally, the EdgeFinder showed a large number of compelling bullish studies. And there was nothing suggesting a bearish edge. So with everything pointing to the upside I was compelled to take a long position overnight.

In a special report I sent out to subscribers I included a study that indicated a 4pm entry was likely a better play than my typical 4:15 entry. So I went long and was filled at 2103.5. This was an improvement on the 4:15 last trade (2105.25) but still a little above the ES settlement price of 2102.75.

Since Seasonality was so strong I elected to use “X Target”. I also used a loose stop.

ES ran up some during the night, reaching as high as 2109.25. So traders using the standard target would have been paid. But it did not quite get to my target, and then it fell back down. At the 9:30 NYSE open I exited at 2102.75 for a 0.75 loss.

It was a very mild loss, but it was disappointing, since I was so close to realizing a big gain. Sometimes I will raise my stop near breakeven when I get close to my target. This wasn’t quite close enough for me to do that. So it was a disappointing night, but not a terribly damaging one. Not all good setups are winners, but by limiting myself to trading just the good setups, I have managed to come out a winner in the long run.

Back later with some more…

 

 

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 2/23 – 2/27

I am finishing all my catch-up on the Overnight Overviews this morning. From the 20th to the 26th there were no trades and the Odds Sheets were all very white. Below are the Odds Sheets I captured. (Apologies, I did miss the 20th and 25th, but they were nothing special.)

2015-02-24 image1

2015-02-25 image1

2015-02-27 image1

With Odds near breakeven each day I sat out this entire period. Interestingly, ES went on a run of gapping down. It opened exactly even on the 26th, but every other day it gapped down in the morning. It was a good time to be sidelined and not trying for overnight gains.

The 27th was more interesting. I’ll discuss that in the next post.

 

 

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 2/20/15 – A Tough Loss

Thursday the 19th showed some strong Odds and it led me to take a position. Below is a look at the Odds Sheet as it stood near the close.

2015-02-20 image1

Overall averages were very strong, mostly thanks to seasonality. Price Action Odds were a bit weak. Internals were modestly bullish. Based on this information along with the EdgeFinder and a special seasonality report I sent to subscribers, there appeared to be an edge strong enough to compel me to take a long position.

As it turned out the odds did not play out that night. I suffered a 6 point loss on this trade. Losses are part of trading. Things just did not work out usual this time. I would take this setup again in the future.

More overviews coming shortly…

 

 

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 2/19/15

Much apologies for the lack of Overnight Overviews in recent weeks. I will get back on track this week. There have been 2 trades, which I will write a bit about in upcoming posts. Below is a screen capture from Wed 2/18.

2015-02-19 image1

Keeping it short and sweet, ES Odds were nearly breakeven. So there was nothing for me to do. I stayed out of the market, which turned out to be a good thing, since the ES gapped down 6 points to open the day.

More overviews to come shortly.

 

 

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 2/17/15

Friday was a down day for the market. The pullback did not do anything to generate strong Odds based on Overnight Edges views of the market. Below is a look at the Odds Sheet as it stood near the close.

2015-02-17 image1

NQ was the only index security we track that met the Overnight Edges standard min Odds for a possible trade. Everything else was pretty close to breakeven – with ES and SPY actually leaning bearish. The EdgeFinder showed several bearish studies suggesting a gap down. Overall, with the evidence somewhat in conflict and not terribly compelling, I elected to sit out.

In the end it was the weak ES Odds and the EdgeFinder studies that proved correct. ES gapped down 3.75 points below where it last traded on Friday.

Good luck if you trade tonight, and rest easy!

 

 

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 for 2/10-2/12/15

Playing a little catch-up here with the Overnight Overview. It has been a busy week from a personal standpoint (thank you snow), but a slow week from a trading standpoint. Below are the Odds Sheets from the last few days with brief notes below them.

2015-02-10 image1

Monday provided some evidence that a gap up the next day could be coming. Some EdgeFinder studies leaned that way. But while the Odds Sheet showed all the major index securities leaning bullish, NQ was the only one that met Overnight Edges standard min criteria for a long trade. I focus more on ES, and evidence just was not quite strong enough for me to take a positions. But some of the more aggressive traders in the room did take NQ overnight.

As it turned out the NQ trade was good. ES gapped up 11.25 points and NQ came in with a 21 point overnight gain. So congrats to those NQ traders that took advantage!

Next are Tuesday and Wednesday night’s Odds Sheets.

2015-02-11 image1

2015-02-12 image1

Not much to say about these. All-white means nothing met the Overnight Edges standard min criteria for either a long or a short trade either night. And additional evidence shown by the EdgeFinder and discussed in the trading room was not terribly compelling either. It would be very unusual for me to take a trade with an all-white Odds Sheet. And so I sat out both Tuesday and Wednesday night as well. Wednesday morning opened with a small gap down of 1 point. Thursday is gapped up 8 points.

Highly favorable setups have not emerged the last few days. When that happens I simply wait for the market to setup. Patience, combined with readiness, is very important in trading. Trades will often come in bunches or not at all. And the last few days have been “not at all”. That will change soon enough.

Good luck if you trade tonight, and rest easy!

 

 

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 2/9/15

Friday was a down day for the market. The pullback did not do anything to generate strong Odds based on Overnight Edges views of the market. Below is a look at the Odds Sheet as it stood near the close.

2015-02-09 image1

An all-white Odds Sheet means that nothing met the Overnight Edges Standard Min Criteria for a possible long or short trade. It is a good bet that I won’t be taking an Overnight trade when the Odds Sheet is all white. But I do still look at other evidence, such as the EdgeFinder. But that was blank and offered no compelling evidence. So it was an easy decision for me to just sit this one out.

That turned out to be a good thing as the market gapped down quite a bit to open the day. ES opened down 10.25 points, and NQ opened down 19.25 points.

Good luck if you trade tonight, and rest easy!

 

 

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.

2/6/15 A Risky Setup I Passed On That Would Have Paid

Thursday was another rally day for the market. It also generated some interesting Odds. Below is a look at the Odds Sheet as it stood near the close.

2015-02-06 image1

Four of the eight index securities we track met the Overnight Edges standard min long criteria and saw their Averages highlighted in green. This included ES, which is what I generally trade. Seasonality numbers were especially strong, and that was largely due to how well employment nights have done over the last few years. But they also add risk, and there were other warnings as well. The market set up in a way that I generally avoid long positions, and I discussed this and showed why in the Trade Discussion Room. Between the extra volatility expected due to the employment report and the extra risk that the daily bar setup was showing, I elected to pass on this potential trade.

Some traders in the room took it, and it worked out for those that had a more aggressive approach. ES was about breakeven going into the 8:30am release of the report, but it popped nicely after the report and opened with a 6 point gap up. So congrats to those that were more aggressive.

Good luck if you trade tonight, and rest easy!

 

 

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 2/5/15

Wednesday was an interesting day, with the news out of Europe causing a late dive. It set up a borderline overnight opportunity that did not quite meet my criteria. Below is a look at the Odds Sheet as it stood near the close.

2015-02-05 image1

For an index security to meet the Overnight Edges standard minimum criteria for a long trade it needs to post an Average Up Gap % > 55% and an Average Profit Factor > 1.30. If it accomplishes this, then it’s Averages are highlighted in green. ES and SPY both just barely missed with Average Profit Factors of 1.29. If other evidence is compelling, then I will sometimes take a trade when the Odds Sheet Averages just barely miss as they did on Wednesday. But there was nothing appearing to get me over the hump. The EdgeFinder was blank. And though YM and NQ both met the minimum long criteria, they just barely qualified. The Greek news was released in the last 30 min. of trading and it was unclear whether the initial reaction was an overreaction, or really what it would mean when Europe opened during the US overnight. So with news hot off the press, no strongly compelling studies, and Odds that did not quite meet my standard minimum, I elected to sit out.

The European open did lead to a market recovery. After being down as much as 10 points early in the night, ES bounced strongly and opened this morning with a gap up of 14 points.

A reminder to all traders that tomorrow morning at 8:30 AM EST the employment report is scheduled to be released. This tends to create volatile conditions, but reactions over the last two and half years have generally been positive, with most employment days gapping up.

Good luck if you trade tonight, and rest easy.

 

 

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 2/4/15

Tuesday the market put in a good rally for the second day in a row. Also for the second day in a row, it did not translate into a strong overnight edge. Below is a look at the Odds Sheet as it stood near the close.

2015-02-04 image1

An all-white Odds Sheet means that nothing met the Overnight Edges standard min long or min short criteria. The Averages simply were not far enough from breakeven in order to suggest a substantial edge. The EdgeFinder provided mixed indications, with one bullish and one bearish study. There is just no way I would look to take an overnight position with an all-white Odds Sheet and a split EdgeFinder. So I sat out

And it was a good night to be sidelined. ES struggled for most of the night, and the selling intensified in the hours leading up to the NYSE open. When the open came, ES gapped down 10.00 points. Over the long run, the overnight has had a propensity to move higher. By identifying times where that overnight propensity has historically failed to exert itself, and avoiding exposure on those nights, traders may be able to reduce the size of their drawdowns. Such was the case last night.

Good luck if you trade tonight, and rest easy!

 

 

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.