Another Look At Nights Before Fed Days

Today I will update a little Fed Day related research I last showed in November. Nights before Fed Days have historically been pretty bullish, often leading to a gap higher. But interestingly, this has not held true when the market is already at an intermediate-term high. Below are a couple of studies that demonstrate this. The first one shows results of going long all nights prior to a Fed Day when the market did not close at a 20-day high.

2014-07-29 image2

Results here appear strong across the board. Now let’s look at times where ES closed at a 20-day high right before a Fed Day.

2014-07-29 image3

As you can see, the bullish inclinations have not played out when ES has closed at a 20-day high. Tomorrow is a Fed Day. ES will need to post a pretty good rally this afternoon in order to close at a 20-day high. If that does not happen, it suggests a better chance of a gap up tomorrow morning.

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.

 

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

Overnight Overview for 7/28 & 7/29

I have a couple of overnight’s to review today, but neither were compelling enough to compel me to take a trade. Below is the Odds Sheet from Friday afternoon.

2014-07-28 image1

Friday showed a bit of a bullish inclination but a blog post Friday afternoon provided a case for the bears. The fact that ES did not quite meet the min criteria combined with the bearish study kept me sidelined. ES managed to gap up 1 point Monday morning.

Next is the Odds Sheet from Monday afternoon.

2014-07-29 image1

Here the Odds are pretty weak, except for IWM. Additionally the EdgeFinder came up blank. So there was very little to base a trade on. Therefore, I sat out. ES did manage some gains overnight and opened this morning up 3.75 points.

With the Fed Day on tap Wednesday, the next few nights could be interesting.

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.

A Down Friday After A 50-day High

With the market closing down fairly strongly today I thought I would look at other times ES closed down on a Friday after making a 50-day high the day before.  Results are below.

2014-07-25 image2

The stats appear solidly bearish.  It appears there has often been follow-though over the weekend under these circumstances. I also examined the profit curve.

2014-07-25 image3

The bearish tendency appears as strong as it ever was based on the chart .

Traders may want to keep this in mind as we approach the close this afternoon.

 

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

Overnight Overview for 7/25/14

Thursday was pretty much breakeven for the major indices. It did not generate a lot of overnight evidence either. Below is a look at the Odds Sheet as it stood near the close.

2014-07-25 image1

Most of the major index securities we track came in with Odds near breakeven. This includes, ES, which is what I trade. While Price Action looked good for ES, Internals and Seasonality were weak. The EdgeFinder did not identify any studies suggesting a strong edge. So without compelling evidence, I sat out.

AMZN got the night off to a bad start with its earnings release after the bell, and futures never recovered. ES gapped down 5 point this morning while NQ opened down 17 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.

Evolving Overnight Implications of 50-day Closing Highs

I’ve discussed overnight performance following 50-day highs in the past, but I thought I would take a quick updated look here today. The chart below shows the overnight returns of all nights following a 50-day closing high for ES.

2014-07-24 image2

After seeing the overnight struggle for at least 13 years, the last year and a half we have seen 50-day highs followed by further overnight gains. I do not know whether the tendency will revert back after this bull market is over. But for the time being it appears that 50-day highs should no longer be considered a bearish overnight sign.

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 Overview for 7/24/14

Wednesday saw new highs in a few of the indices, but the good feeling did not translate to compelling overnight edges. Below is a look at the Odds Sheet as it stood near the close on Wednesday.

2014-07-24 image1

NQ and IWM were the only 2 index securities we track that were meeting the min long criteria. ES is what I trade, and it was not close. Price Action, Internals, and Seasonality were all just a little above breakeven. But the EdgeFinder pointed to some bearish studies. So I was again left with the kind of crosswinds that typically cause me to stand aside. And that is what I did.

ES managed to overcome the bearish studies and post a small overnight gain of 2.75 points. Aggressive NQ traders would have been paid off as NQ gapped up 10 points this morning.

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 for 7/23/14

Tuesday saw the market reach new highs, but the action did not do much to suggest a strong overnight edge. Below is a look at the Odds Sheet as it stood near the bell.

2014-07-23 image1

All-white means nothing we track was meeting either the min long or min short criteria for a possible trade. Averages across the board were near breakeven. The EdgeFinder showed some bearish evidence, but on its own it simply wasn’t nearly enough to compel me to take a position. So as I do when there is not a strong edge apparent, I sat out.

ES did manage some gains overnight and opened up this morning with a 4.75 point gap.

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 for 7/22/14

Monday was another inside day accompanied by a mild pullback. There were some overnight edges worthy of consideration. Let’s take a look at the Odds Sheet and then I’ll discuss my thinking and approach to last night.

2014-07-22 image1

The Odds Sheet looked fairly bullish. Four of the 8 index securities we track met the min criteria for a possible long trade. That means they showed an Average Up Gap % > 55% and an Average Profit Factor of > 1.3. When this happens they show up in green. SPY met the min criteria, but ES, which is what I trade, did not. It just missed with an Average Profit Factor of 1.26. The EdgeFinder was blank but I showed a fairly compelling study on the blog yesterday that suggested an upside edge. Overall, I liked the evidence and thought there was a good chance of a gap up this morning. While I don’t normally take a position if ES is not meeting the min criteria, I determined I would go long if ES closed <= 1964.50. Unfortunately, it did not quite get down there, finishing at 1966.50.

The market put in a strong move overnight and ES gapped up 8.75 points to start the day. So it was too bad that I did not get a fill on my position. There were a few NQ traders in the Discussion Room that went long. I suspect they made out well since NQ gapped up 21 points this morning.

So if you took a more aggressive approach and got paid off, congrats! If the trade did not meet your criteria and you sat out – then you did the right thing. Taking trades that don’t meet your standards will likely be harmful to your account in the long run. Discipline, and trading with the odds in your favor, is extremely important for long-term success. Take all the trades that you believe the edge is strong enough, and sit out all the ones where the edge does not appear strong, and you should profit nicely over time – no matter what type of trading you do.

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.

What An Unfilled Gap Down Today Could Suggest For Tonight

The market is off to a rough start here on Monday morning. After gapping down to open the day it has continued to sell off. I decided to look at other times during long-term uptrends that ES left an unfilled gap down on a Monday after having risen the day before. The overnight results were interesting. Below is a look at the stats table.

2014-07-21 image2

More than 75% of instances were followed by a gap up the next morning. The average instance gained nearly 3 points overnight, and the average winning instance gained about 6 points. Below is a look at a profit curve to see how the edge has played out over time.

2014-07-21 image3

The big drop in the middle was a nearly 3% gap down that occurred the morning of 3/15/11. Other than that 1 instance, the curve looks fairly appealing and seems to confirm the upside edge suggested by the stats table.

Traders may want to keep this in mind as we approach the close this afternoon.

 

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

Overnight Overview for 7/21/14

Friday was a bounce-back day for the market. It did not do much to trigger strong overnight implications, though. Below is a look at the Odds Sheet as it stood near the close.

2014-07-21 image1

SPY was the only index security we track that had its Averages column highlighted. The orange highlight means that it met the min criteria for a possible short trade. Unfortunately, it was not confirmed by any of the other securities. ES is what I trade, and though Internals and Seasonality were both weak for ES, Price Action was positive enough to make the Averages about breakeven. The EdgeFinder did not show any strong evidence either. So with not much more than a mild downside inclination, I did not find the evidence compelling enough to trade. So I sat out.

The market did struggle over the weekend and ES gapped down 5.50 points at the open Monday morning. The other indices also gapped lower, with NQ dropping 5 points, TF 6.30, and YM 52 points.

I’ll be back a little 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 & Trade Result

Thursday was a big down day for the market. And it led to strong Odds and a wild overnight. Below is a look at the Odds Sheet as it stood near the close on Thursday.

2014-07-18 image1

As you can see the Odds were very strong all around. Additionally, the EdgeFinder showed bullish studies. I also sent out a special report to subscribers that suggested the overnight probabilities could be even stronger than was shown here. So with Odds strong, and other evidence supporting, I elected to go long at the close.

I was filled at 1953.50 a few seconds before the close. My intention was to use the standard calculated stop of about 10 points and the X Target amount. I go for larger targets when the Seasonality Up Gap % comes in > 55%, which it did on Thursday. As I have noted a number of times, I am out of the office this week. So I was placing entries via my phone. So while I thought I had a stop in place at 1943.50, I did not.

When I got back to my computer later in the evening I noticed I should have been stopped out, but was not. I then decided to enter a stop and target at that point. My order entry error turned out in my favor, because after selling off 11.50 points after the close, ES rebounded all the way and opened the day with a 4.75 point gap up. I got out a few seconds before the open with a 5 point gain.

It was an unusual night. ES traders may have been stopped out, and probably were if they used the standard calculated stop. ETF traders, who are not able to use stops, would have made out with nice profits. Additionally, NQ traders would have made out well. NQ never reached its 27.40 point calculated stop, and it managed to gap up 17 points this morning. So I am sure experiences were mixed which is unusual.

I always report what happens to me. This time I got positive slippage from an entry error. Other times, like last Summer, I have had negative slippage. Stops outs that turn around and become profitable are also extremely unusual. The last one I can recall was nearly 2 years ago. (And I got stopped out near the low of the night on that one.)

Luck certainly plays a part in trading. But luck is more important over the short term than the long term. Over the long term, if you trade with an edge, use reasonable money management techniques, and take a consistent approach, luck will tend to even out and profits will have a good chance to accrue.

Enjoy your weekend, 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 for 7/17/14

I am again out of the office today and will be keeping this brief. Below is a look at the Odds Sheet as it stood near the close on Wednesday.

2014-07-17 image1

A few of the index securities we track were suggesting an upside edge with their Averages highlighted in green.  But ES is what I trade, and its Odds were fairly close to breakeven.  Additionally, the EdgeFinder was not providing any compelling evidence.  So it was a pretty clear-cut decision for me to stay flat.

As it turned out the market gapped down 6.25 points to open the day, so I was fortunate to sidestep that.

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.