September 17 Intraday SPY Recap

Sep 17, 2009: 6:44 PM CST

I thought there were many opportunities to trade and learn from the price moves of today’s intraday action in the SPY (and broader markets).  Let’s take a quick look:

First, the 5-min chart:

Without describing the whole day, I wanted to call your attention to the intraday reversal that took place at 12:30 CST in terms of the amount of confirmation/non-confirmation that occurred.

Price formed a 5-wave fractal move down (detailed on the 1-min chart below) into a positive momentum divergence and – more importantly – into a positive TICK divergence.

Beyond this, price formed a bullish hammer (red) candle followed by a strong bullish (almost) engulfing candle (white) which would have triggered an entry at a close above $106.80 (the candle’s high).

The play would be for a ‘intraday low’ to be made (meaning “play long for a trend reversal”) and then a stop-loss would be placed just beyond the intraday lows of $106.60.

Price managed to form an “ABC” three-wave rally off these lows, allowing for a profitable exit (into the resistance line of yesterday’s close) just before the final breakdown… or even holding until the close would have produced a profitable trade.

Another trade example would have been the “cradle doji” on the retracement against the new price, momentum, and TICK low formed just before 11:30am.

Next, the confirming 1-min structure:

(Click for Full-size image)

There was extra reason to get long off the 12:30pm reversal up – mainly coming from a trendline break (as shown) along with a bullish crossover and price break above the 20 and 50 EMAs just after the trendline was broken.

For those looking at higher timeframes (not shown), price found support (at the intraday lows) at the confluence of the rising 50 period EMA and lower Bollinger Band on the 15-min chart.

Such is how you set-up, trade, and then study (for reference) ‘idealized trades’ in terms of low-risk (tight stop), high probability (multiple sources of non-correlated information) trades.

The full description of the day, including a daily chart and confluence Fibonacci projection (targets) chart of the SPY is online at the Premium Page for subscribers to the daily “Idealized Trades” Reports.  Please consider becoming a member and learning more about this service.

The more we learn these patterns and structures (that repeat with regularity), the better we’ll be to recognize them and then trade them with confidence when the trades set-up intraday.

You don’t have to capture everything in real time – just enough to put the odds in your favor for low risk, high probability opportunities.

Corey Rosenbloom, CMT
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14 Responses to “September 17 Intraday SPY Recap”

  1. Name Says:

    What's the unnamed indicator on that chart? Trying to set that chart up in my TradeStation desktop. Thanks for the interesting read.

  2. Corey Rosenbloom, CMT Says:

    It's the 3/10 Oscillator, a type of MACD customized indicator.

    Here's a link where I describe it in more detail:

    Basically, just type in 3, 10 , 16 into the input fields in a MACD indicator, though the indicator I'm using utilizes simple moving averages instead of the EMAs as the MACD uses.

  3. Name Says:

    Thanks. That's what I thought it was. I'll have to spend some time trying to customize the MACD indicator to display like yours. The default one for tradestation uses the MACD line, the MACD average, a histogram for the difference between the lines, and a zero line. Yours looks like the MACD line, the MACD average, and then a histogram showing the distance between the average and zero line.

  4. Name Says:

    Opps, I mean the histogram shows the distance between the MACD and the zero line.

  5. Name Says:

    Woot. Got it looking like yours. I really find it easier to read.

    It was easy to write the indicator, but you should consider posting it for people who arn't that familiar with TS.

  6. Corey Rosenbloom, CMT Says:

    Looks really good!

    I was going to say that I place no value at all on the histogram. The bars are more for esthetic reasons – this indicator was taught to me by Linda Raschke of LBR Group, whose 3/10 Oscillator looks more like yours than mine in terms of the color gradient.

    The reason I don't post it is because it came with a education package from LBR Group and is proprietary (I didn't code it). I made small modifications, but the code belongs to LBR Group.

  7. johnnywalker Says:

    Wave 4 goes into wave 1

  8. EshwarPravar56 Says:

    I think a few pictures might help this blog

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    Can i have more info on this ?

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  10. DominickBakerm88 Says:

    really nice post

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  11. Environmental Chambers Says:

    Where can i have more info on this ?

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  12. ZacharyRobin Says:

    I bookmarked your post will read this latter.

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