Market chat

[Mr. Charts]

Roger - no, I didn't consider closing at 20.80 as the futures were still showing signs of strength and CIEN only topped out earlier in the session when the futures did - and since CIEN was much stronger than the futures I reckoned it had enough upward potential to go further. I suspected it would stall on the approach to the round figure of 21 and exited on the first slight sign of weakness in the 20 nineties. I did consider running part of the position to MOC but decided the final late run wasn't going to be strong enough. I was mistaken as it rose further - but hey I took a couple of good runs out of CIEN today and went long emini Nas to almost the end of day when a strong run did materialise, so got more profit in the rise that way.
Richard

 

[Naz]

Hi Richard that was very interesting.I regret that i hadnt been following the stock and your post alerted me to it.If i had been in the stock i would have sold out where you did.My reasons had everything to do with the resistance on level 2 at 21 and no interest by the ECN's at that time in taking it higher.

Although it broke through the round number i thought it felt a real half hearted affair and as i had said if the market had turned down i would have shorted it.

 

[Naz]

Just for interest on the thread.

I will look at Ciena again today because of seeing it yesterday and chatting about it on the thread.But from a level 2 point of view i found it difficult to want to trade it at the end of the day because its actions although looking quite good on a graph were not clean enough.ie there was no direction from a strong lead ax,the movements were ragged and disjointed after it broke through the round number resistance.With no clear leadership or understanding.It felt like it was saying oh well if i realy must go up because the market is moving then i will,but i'm not happy about it.A bit like an employee who thinks he's done enough for the day and wants to go home.

For the same reasons that a t/a player might look at a graph and pass it by because it ddn't have what he was looking for the same can be said by a level 2 trader who wants to see conviction,leadership,character etc.This makes it easier for him to trade.

 

[Naz]

Another thing worth thinking about is that with 4/1 margin on US accounts its now easier to trade stocks in the $30-$60 range.This means that if a $15 stock moves $1 then a $60 stock would move $4 for the same %age rise. This gives more room for the level 2 trader to use his skills and dance around the screen.It also means that the low priced stock hits a round number resistance once but the $60 stock would hit resistance 4 times giving loads more pullback oppertunities.The breakouts through the round number you could argue could therefore be four times as strong giving the chance to realy surf the upside momentum.

I think this is one reason that stocks change their character as they go from one price trading range to another.They tend to attract different types of people that trade it.

Any thoughts anyone?

 

[ChartMan]

Yes, Naz, I think people cut their cloth according to their width. Those with deeper pockets will seek out higher priced opportunities,rightly or wrongly, assuming they may make more money.

 

[Mr. Charts]

Just to return for a moment to CIEN. I suggested the resistance was around the 22 mark and today it rose to $21.71 before heading south. Sadly I wasn't around at that time so couldn't take the trade. Again trended well today.
Will make some comments tomorrow about your $60 stock ideas, Naz.
Richard

 

[Naz]

Hi Richard,

I was showing one of the traders from this site how level 2 works this afternoon.Live on Ciena.We followed it without looking at a graph.Morgan Stanley(MSCO) was running the stock and we nailed the EXACT bottom and i mean exact bottom of the pullback from the open which was made when Goldman and Lehman became buyers on the bid with MSCO.Then ran it for the move you mentioned.

I'm not suprised it has sold off because i said yesterday in my post that when it broke the round number it was a half hearted affair and if the market turned down i would short the stock.I said this because i could feel the weakness in the stock which was reflected in its character on the level 2 screen.Therefore it is no suprise to me that my feelings about the stock posted here 24 hours earlier have turned out to be absolutely true.

As i write this the stock has fallen about 10%.

 

[Mr. Charts]

Yes Naz, this does work sometimes when similar stocks, say semis, move in very rough tandem %age wise. Tech stocks in dissimilar sectors, say Broadcom and Klac, tend not to unless they are all swept up in a broad based fast moving market.
I must confess I've never investigated that during market hours looking for potential or round number s/r. Does the latter actually happen? Impressionistically I doubt it but haven't done a live or retrospective analysis. I'd be interested to know if you have and what the results were.
I tend to trade with lot sizes approximated to the nearest hundred, i.e I trade 5 times as many CIEN as IBM ($20 against $100), but then often add more pyramiding up/down if the trend keeps on running my way.
Thanks again for your stimulating and thoughtful imput.
Richard

 

[Mr. Charts]

Re-your 8.32 post
Yes, we both came to almost identical conclusions from two differing but closely inter-related viewpoints. I certainly agree with your opinion about TA and L2 integration - self evident almost. With people like you, Jea Yu, Rogan Labier, Ken Wolff and others promoting the essential nature of Nas L2 it will be used more and there might be some dilution of advantage competitively, but L2 is essential as you say for feel and timing.
I would certainly use it constantly if most of my time wasn't devoted to futures trading. I can't watch L2 in sufficient depth and attention and trade futures too - brain too small ;-)
Richard

 

[Naz]

Hi Richard,

Yes round numbers are important and so are decade numbers.Look at how Ciena's collapse still bounced at the decade number ($20) in this latest fall.Its also important to look at a level 2 screen to see how the players react at round numbers.this was how we nailed the pullback on Ciena this morning by watching level 2 and seeing how the players reacted to the round number.This is one of the reasons why using both t/a and level 2 can be beneficial.When your not sure of support and resistance it will be as black and white on your level 2 screen.🙂

We keep crossing in our posts but i totaly agree that integration by using both t/a and Nasdaq level 2 gives the trader a formidable advantage.but be warned once you get used to Nasdaq level 2 you'll hardly need look at a graph!

 

[Naz]

Hi Steve(flea)

I realy enjoyed the course with you on Tuesday i,m glad you were able to see how to trade Nasdaq level 2 without even looking at a graph and not even knowing the direction of the market.

If you look at my posts on this thread you will also see that i felt a general weakness in Ciena 24hours earlier when it broke thru the round number and suggested that even though it looked good on a graph if the market turned i would short it.Ciena sold off big time on Tuesday.

The more you watch Nasdaq level 2 the more you can become almost clairvoiant with with its movements in different time frames.I hope people on this thread will also see you dont have to be a manic scalper to take advantage of the level 2 screen.Watching events unfold will alert you to the character and feeling of the stock so when the time is right you can jump on a longer time frame trade and capture 10% gains in a day like the fall of Ciena yesterday.

Fleas response to his Nasdaq training can be seen in the "Technical analysis and system trading" section of the board under the thread "Nasdaq level 2 Training"

My e-mail is [email protected] if anyone wants to talk to me about anything.Good luck

Naz(Alan Rich)

 

[TraderPattern]

Hi Naz (and any other Level2'ers here),

I came across this excellent Level2 routing resource, which is up-to-date for recent changes. It does a decent job of detailing the routing options (although it doesn't go into specific trading tactics ... only experience and/or training can achieve that!).

>>>> http://www.hardrightedge.com/work/orderrouting.htm

Regards,
TraderPattern

 

[Naz]

Thanks trader Pattern i found that very interesting.

Now for a post that i put on this thread on Sun 18/11 about the Nasdaq and fibonnacci levels.I mentioned 2 important fib levels from Jan and May were crossing at approx 1963 where suprise, suprise the 200 day moving average also passes.I also argued that if the Nasdaq comp closes the gap this week and makes the higher low it could make a run to this level.Well just to let you know that the Nas comp has indeed this evening just closed the gap.

I'm suprised the t/a guys arn't crawling all over this graph.Chartman where are you.

 

[neil]

naz level2

Since joining this board two days ago it has been an eye opener. I spread bet pork bellies or favoutite volatile shares like Cambridge Antibody Trust. Then found many US shares are more volatile and offered better profit potential. But I hold trades for several days using end of day data with sharescope (UK shares) or prophet finance (for US shares and commodities like pork bellies etc).
I am presently looking at CFD's and the new LIFFE universal stock futures - opinions anyone?
Naz may well be right that you can feel the market pulse on level two - I once saw someone's ticker tape a few years ago on their chart package and was struck how quickly you get a sense of what is moving up or down but he would not jump in and go with the flow. Rather he would bother with a penny stock on rumour and lose (Tadpole, Rage etc)
I would like to see a level 2 screen in action to see if the feel for the market is still there.
The learning curve is steep and people like Finspreads are useful for getting ones' feet wet but where to go now that one is more confident and a happy TA trader?
This site has the makings of a home for all traders and a great school and , dare I say it, a social club.
Neil

 

[Naz]

Neil,everyone if you are a true trader of the markets there is no truer place to get everything you realy need than on a Nasdaq level 2 screen.Do not even compare it with level 2 in the UK.It is a completely different animal.

Yesterday i taught Splurge from this BB.His comments can be seen in the "Technical Analysis and system trading section"under "Nasdaq level 2 training".I hope he wont mind me saying that in his e-mail he sounded a little sceptical.However when he started realising the things that you could do with your orders,the advantage that you can have over less well educated level 2 players and the feel you can get for the moves.his response was "Oh my god!!" The look on his face when i kept showing him different points was a delight to behold.

Trader Pattern and myself only go on about this form of trading because we went down a learning path and found something that truely gives anyone an edge and lets them become a leader not a follower, with information and executions to think and trade like a market maker.I urge you to read Splurges comments in the Nasdaq level 2 training section along with other traders from this board.Once again my e-mail is [email protected].
Call me.

 

[TraderPattern]

Nice stuff Naz, on CNBC today!

We were in the online room watching you as you explained your thoughts... keep up the nice work!

 

[Naz]

Thanks Trader Pattern.

Its a shame that i have to give the public what they want instead of talking about Nasdaq level 2.But as i've been told its a news station and people want that kind of information.With the audience going out today all over the US and the rest of the world at least every one now knows where those fib levels are.But here on market chat we knew before them all didnt we.🙂

 

[Naz]

If you are interested,

after i appeared on CNBC i got some calls from other Nasdaq traders that are starting to get twichy about the market.We know that there is this large fib resistance at 1965.Right by the 200 day moving average.The Dow is getting close to 10,000.More people have been enticed back into the market.(a bad sign)I've t been told that one of the big US guru's (Jea Yu)) has mentioned 8 stocks to swing play short.The most he's ever done.

If the Nasdaq has been selling off all the way down from 5000 on fib retracements for 18 months what makes this time different?It only needs one major news item with the market at its highs in this latest rally and down we go.I wouldnt want to be holding any UK stocks overnight if that happens.How can you stop trading at 4.30pm when you know that the price on your stocks will be affected the next morning by a market that is still trading for another 4 1/2 hours.

The major moves in the US stocks happens many,many times when they come back from lunch and your watching "Coronation st."

When you wake up in the morning and see how much the market makers have gapped down your stocks you'll think your watching "Nightmare on Elm street."

Only a personal view,dont have nightmares.But you might sleep easier if you trade US stocks and have complete control over your stocks all the time with the abilty to go long or short in the blink of an eye.How do you do that? You trade Nasdaq level 2 direct access of course. 🙂

 

[Mr. Charts]

Missed your performance - maybe if you are going to appear you could post here in advance!?
A boring day today with only a few hours of trading. I didn't intend to trade but picked up some AOL as it broke thro 37. It's up a bit and I'll run a stop at 37.05 to 37.08 - and trail it up if it rises
Richard

 

[Naz]

A week ago on i mentioned Nasdaq fib retracements on this thread and suggested that the Nasdaq could close its gap this week which it did.Then it had big problems where 2 fib levels lie.This problem for the Naz is going to be between 1900/2000.

As Riz said on this board "I dont trust Fridays rally on thin volume"
Grey says on another thread"Fibonacci is the most powerful reversal signal in t/a" and two major one's from from the retracement highs of this year on the Naz are sitting between 1900 and 2000.As another side point my daily Nasdaq stock and indices graphs have got MACD divergencies on chart after chart after chart.

Now i only mention this for people who maybe trade daily/weekly in the UK.Why i dont know,because by now i should imagine everyone knows that the rest of the world copies the US.I could not abide to finish trading at 4.30pm in the UK knowing that the price of my stocks was going to be affected the next morning by what happened in the US.The only answer for me was to trade the US markets and of course the internet offers this.

The most sensible way i think to trade the US is on a Nasdaq level 2 direct access screen.Now i know that all this resistance is sitting there on the Nasdaq but who cares i can see every movement in my stock,i can see exactly how its being controlled and i can go long or short with direct access in an instant.So during the evening's when the UK is shut i will see exactly how my stock is behaving.If i was a daily/ weekly trader reading and trading Nasdaq level 2 i could feel calm and relaxed knowing that i had all the tools and information at my disposal to see what was realy happening.

Therefore i dont care which way we go i could react to it with ease.Not loose sleep overnight worrying how much i was going to be ripped off the next morning like i did when i traded the UK market.Nasdaq level 2 direct access is for all traders in all time frames its just that its so good, some of us take advantage of it a lot more than others🙂

And yes lots of us were t/a traders in the UK before we found and were shown something that made our jaws drop, our eyes open wide and think we'd just gone to Heaven.We just needed an open mind to explore another avenue of trading.