Overnight Overviews from 9/12 & 9/15/14

A busy day here and not much to talk about with regards to overnight setups the last couple of nights means I am going to keep this very short today. Below are the Odds Sheets from Thursday and Friday as we approached the close.

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As you can see, they were both all-white. When the Averages column is not highlighted in green or orange that means nothing met the min criteria for a possible long or short trade. It would take some extraordinary additional evidence to get me to take an overnight trade when the Odds Sheet is all white. I did not do so either Thursday or Friday night.

Thursday night led to a small gap down of 1.75 points Friday morning. Monday there was a small gap up of 0.75 points. So there was not much to be made or lost either way.

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 for 9/11/14

Wednesday saw a bit of a rebound, but the bullish intraday action did not lead to strong edges for the overnight. Below is a look at the Odds Sheet as it stood near the close.

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All-white means that none of the index securities we track met the min criteria for a possible long or short trade. It also means that I will typically be standing aside unless I see extremely compelling evidence elsewhere. And with the EdgeFinder blank, there really was no decision for me to make. I could not identify an edge, and therefore I had to sit out.

As it turned out, that was a good thing. ES and the rest of the futures had a rough night, all opening this morning with sizable gaps down. For ES it was an 8 point overnight drop, and for NQ it was 16.25 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 for 9/10/14

Tuesday saw the strongest selling the market has seen in a while, and the lowest closing prices in a while as well. The overnight evidence came close to getting me into a trade, but some late movement kept it from happening.

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Looking at the Odds Sheet, QQQ was the only security that met the min criteria for a possible trade. It’s Averages were highlighted in green, meaning the minimum long criteria was met. As we approached the 4pm NYSE close YM and NQ were also green, and ES Odds were very near meeting the min criteria. There were also some bullish studies, including the one I showed on the blog yesterday afternoon. But as we got closer to the 4:15pm futures close, prices bounced a bit, and this caused the Price Action Odds to weaken for all 3 of those futures. So while it looked like a borderline decision at 4pm, it was pretty clear by 4:15 that the evidence just was not strong enough for me to take an overnight position.

The night was a choppy one that failed to make much progress in either direction. In the end ES gapped down 1.25 points and NQ gapped down 0.25 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 Implications of Pullbacks from Highs

ES gapped down this morning and is off to a rough start so far. Unless there is a reversal and a close higher today, it will market the 2nd day in a row that the market has gapped down and failed to reverse and close positive on the day. I examined overnight returns following all other instances in which ES did this immediately after closing at a 100-day high. Results are below.

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The stats here point to a probable gap up the next day with gross profits more than doubling gross losses in the sample. Below is a look at the profit curve to see how the potential edge has played out over time.

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The curve is certainly choppier than I would prefer to see. This suggests the edge is not as consistent as the numbers might make it seem. But it has continually chopped its way higher. Overall, this seems to hint at a bullish overnight setup. In my eyes this study is worth taking into consideration along with other evidence as we approach the close today.

Good luck if you decide to 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.

 

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Overnight Overview for 9/9/14

Monday saw a mixed day in the market and also some mixed evidence for the overnight. Below is a look at the Odds Sheet as it stood near the close.

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DIA and NQ were the 2 securities whose Averages appeared in green, meaning they were the only 2 that met the min criteria for a possible long trade. ES is what I trade. It leaned bullish, but not strongly. Internals showed solid bullish stats, but Price Action and Seasonality were only modestly bullish. Additionally, the EdgeFinder showed a bullish study as well. Overall, there seemed to be a bit of an upside edge, but not strong enough for me to take an overnight position. There were some NQ traders in the room that elected to trade NQ overnight.

As it turned out, ES failed to gap up. The open this morning came 2.25 points below Monday’s close. But NQ traders still could have posted a small gain, as NQ gapped up 0.75 points this morning.

I’ll 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.

Overnight Overview for 9/8/14

Friday saw a solid rally to new highs. But the overnight outlook was not terribly appealing for the weekend. Below is a look at the Odds Sheet as it stood near the close.

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When the Averages column appears in all white, that means that none of the index securities we track are meeting the minimum criteria for a possible long or short trade. ES is what I trade and Odds there were mixed, with Price Action and Seasonality coming in weak and Internals moderately bullish. Additionally, the EdgeFinder also identified a mix of bullish and bearish studies. Sot there was no obvious directional edge. And with such a weak mix of evidence it was an easy call for me to sit out.

As it turned out the market struggled a little over the weekend. Monday morning opened with a gap down of 2.50 points.

Have a great night trading, 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 9/5/14

Thursday provided some interesting overnight evidence and it also led me to take a trade. Let’s first look at the Odds Sheet and then I’ll discuss how things played out.

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As you can see, SPY, ES, & NQ all saw their Averages appear highlighted in green. ES is what I primarily trade in the overnight, so that is where I focus the most. Numbers there were solid across the board, with Price Action, Internals, & Seasonality all pointing higher to some degree. Additionally, the EdgeFinder identified 3 studies that all suggested an upside edge. So I decided I would enter long at the 4:15 futures close if ES closed at 1998.50 or lower. It met those qualifications and I got long at 1997.75.

My initial plan was to use the standard stop, but place my target somewhere between then Standard Target and the X Target. The employment report always adds an element of risk, so I intended to take profits ahead of the report if my position was profitable. If not, then I would simply keep the stop in place and manage it as usual.

Unfortunately, the trade never made it that far. A selloff in the early morning saw me get stopped out of my position at 1989.75 well before the employment report was even released. Then, upon release the market jumped up. ES briefly made it back to positive territory before opening with a gap down of 2 points. Anyone that took the ES trade and used the standard stop as I did got the worst of it. ETF traders would have made out much better. SPY only gapped down $0.04, and QQQ gapped up $0.19. NQ traders would have made out well, regardless of whether they used the standard stop or not. NQ’s stop point was never reached and it rebounded nicely and opened up 5 points this morning. So your experience last night would have depended largely on your security of choice as well as whether you used the standard ES stop. Unfortunately for me, I got the worst of it. But I am thankful that some others in the room were able to book profits.

It has been a frustrating couple of months for me. Last night’s stop out was the 4th time the stop has been hit in the last 2 months. Typically, there are 2-3 per YEAR. And none of the stops helped the cause. They all saw a partial or total rebound. I recently did some research for subscribers with regards to stops. We discussed it in the trading room and I wrote up a paper on it. I intend to edit it in the next few days and update my comments. At this point I am strongly considering adjusting my stop tactic.

Last night’s loss also has the Overnight Edges Tracking Account mired in its worst drawdown (nearly 8%). While drawdowns are incredibly frustrating (especially when they are due to multiple barely hit stops), they are part of trading. The nice thing about my overnight strategies is that they are not, and have never been, well correlated with my other strategies. The overnight drawdown is not coming at a particularly difficult time. And if my other strategies start to suffer a little, perhaps my overnight stuff can help me at that time. In any case, I have done this long enough that I am not overly discouraged. I’m confident months and years down the road the current overnight drawdown will look like a hiccup in my profit curve.

It is also encouraging that while my stop management has let me down lately, the core Odds and studies have played out well for multiple indices. If I was using SPY or NQ as the proxy in the overnight tracking account, it would be at or near a new high, rather than in a drawdown.

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.

Employment Day Gaps Over the Last Couple of Years

I have shown the study below a few times since last fall, but the hot streak has remained strong and I felt it deserved an update. The stock market has been loving the Employment Report over the last 25 months. The Employment Report is released at 8:30 AM Eastern (normally the 1st Friday of the month) and it is often followed by a quick move in the futures. This will typically mean increased overnight activity and a more volatile open. In recent times, that volatile open has been to the benefit of the bulls. This can be seen in the study below.

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The numbers here all strongly favor the bullish case. Twenty of the last twenty-five instances have gapped up, and the average open has seen ES gap higher by more than 5 points! Below is a profit curve to see how the edge has played out over time.

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That is a pretty straight line – an encouraging sign for the bull case, even with last month not panning out. Of course while the Employment Report will be a big factor in where the market gaps tomorrow, there will be other factors to consider as well. I’ll consider everything at my disposal (Odds Sheet, EdgeFinder studies, etc.) before making a decision. Traders that do take an overnight trade should be prepared for increased volatility and have a plan on how they wish to handle it.

It is also worth noting that the last 25 months have not been typical. The market has seen a number of hot and cold streaks with regards to the employment report over the years. The current streak is strong, but I still just consider it a streak – not a time-tested edge.

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.

 

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

Overnight Overview for 9/4/14

Wednesday saw the market start strong, but it faded and most of the major indices ended up closing lower. Overnight evidence was mixed. Below is a look at the Odds Sheet as it stood near the close.

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The NASDAQ 100 index proxies along with DIA showed solid numbers and met the minimum criteria for a possible long trade. ES is what I trade, and its numbers were less compelling. Price Action and Seasonality were moderately bullish, but Internals were a little bearish. This left the Averages fairly neutral. There was one study that appeared in the EdgeFinder, and it suggested a bearish overnight inclination. So the overall Outlook did not provide a clear and compelling case for me to take an overnight position. Therefore, as I typically do under such circumstances, I sat out.

As it turned out, the Odds Sheet inclinations given by NQ, QQQ, and DIA were correct. The indices all saw a bit of a gap up this morning. ES gapped up 3.75 points this morning, while aggressive NQ traders would have been rewarded with a 9.25 point gap up.

Tomorrow morning is the release of the Employment Report. Overnight traders need to be aware of this and need to factor into their trading plans. I will share a little research about the Employment Report later on this afternoon.

 

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 9/3/14

Tuesday was a quiet and mixed day for the market. And overnight indications were quiet as well. Below is a look at the Odds Sheet as it stood near the close on Tuesday.

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There was very little here worth discussion. When the Averages columns are all-white that means that nothing met the min long or short criteria. Additionally, there was nothing that appeared in the EdgeFinder. So other than the very mild bullish numbers shown above, there was nothing I was seeing to base a trade on. Overall evidence was not close to where it needed to be and it was an easy decision to simply sit out. So that is what I did.

Futures reacted to rumors and news from the Ukraine overnight and saw a solid run-up. ES ran up over 11 points during the night and opened this morning with a gap up of 8.25 points.

Have a great night trading, 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 9/2/14

Friday was a strong day for the market, and it again saw several indices close at new highs. From an overnight standpoint, there were some bullish indications, but there was also some conflict. Below is a look at the Odds Sheet as it stood near the close on Friday.

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6 of the 8 index securities we track met the minimum criteria for a possible long trade, and saw their Averages appear in green. This included ES (but did not include SPY). A closer look at the ES readings on the Odds Sheet reveals that Price Action and Internals both leaned bearish. But Seasonality was so strong, that it pushed the Averages up high enough to meet the minimum criteria. I looked at Seasonality along with some other factors in more detail in a special report I sent out to subscribers in the early afternoon on Friday. The bottom line with that report was that a strong close and a new high for ES would dampen the seasonal edge. In other words, it was my belief that the posted Seasonality numbers were overstated on Friday. And with Price Action, Internals, and SPY numbers not impressive, I elected to sit this one out.

As it turned out, I missed out on a small winner in this case. ES opened on Tuesday morning (after the long weekend) at 2004.00. That is a 2.50 point gap up from Friday’s settlement price. It is always a little frustrating when I miss out on a “valid” potential winner, but given the same evidence I saw on Friday, I would make the same decision again next time.

Have a great night trading, 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 8/29/14

We again did not see much overall change in the market on Thursday, but the overnight setup was a real close call. Below is a look at the Odds Sheet as it stood near the close.

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All 4 of the ETFs we track, met the minimum criteria for a possible long trade. But only one out of the four futures met the minimum long criteria. The primary reasoning here is that there was a strong move in between the 4 PM NYSE close and the 4:15 PM futures close. As we were nearing 4:15 I was prepping to take a long overnight position. But as I indicated in the notes on the Trade Discussion Room page, I only wanted to get long if ES closed at 1996.50 or lower. My entry was missed by a mere 0.50 points. So I sat out.

That was somewhat unfortunate, since ES gapped up and opened at 1998.75 on Friday. And with NQ gapping up over 7 points, more aggressive traders would have been paid off, regardless of the instrument they used.

I will be back a little later to update the Friday afternoon/long weekend setup.

 

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.