End of Quarter Window Dressing Discussion

Markets are about reality, and what I mean is that you have to accept certain things about market behavior. For example, options expiration plays a key role during the week of expiration and on expiration Friday itself. To ignore that is to ignore key information that can help you trade better.
Another key reality is that the end and beginning of quarters tend to have certain characteristics for stocks and the indices. Essentially, the idea is that we commonly see the market go flat for the last couple of days of a quarter as the major funds have their positions placed and the market is largely sitting where they want it to for the end of quarter statements for clients. What is also important here is to realize that after the quarter does end, things start to pick up to make up for the fact that the market was artificially contained. Here's an example of how this can look, and there is no magic formula for whether it will be one day or three days or five days.
This time, it was five days. Here's the S&P 500 showing trading from last Friday through the end of this Thursday, which was the last day of September and Q3:
S&P End of Quarter Action
Basically, 90% of that week was in an impossibly narrow 9 point S&P range. We had a spike down Tuesday that returned to the main range and a spike up Thursday that did the same (both gave us nice opportunities, include several big stock winners on the gap down Tuesday and almost a 20 point winner on the NQ futures contract on the gap up Thursday.
This is not normal market behavior. You would be hard-pressed to find something similar that wasn't either a significant holiday week or an end of quarter. The fact that this went a full five days is pretty amazing. It wasn't apparent after Friday, the first day, and Monday was a disappointment, but after Tuesday, you had to see the rest coming.
Meanwhile, let's look at how Q3 started back at the beginning of July. Note that the Fourth of July holiday was right at the start, so really the move starts after everyone gets back.
Beginning of Q3 on S&P
That's a nice move and was very easy to make money in. 60 points in about 5 days.
So these things happen, but they don't tend to happen at random times. The first days of a quarter are commonly good periods of movement (doesn't have to be the very first day, but usually pretty quick). The end of the quarter can be slow, whether it be just a day or two or more. You need to understand that and factor that into your trading. I had a successful week because I saw this early and adjusting my trading accordingly. I focused on the opening 90 minutes and did well on the two days with the gaps, but was fairly picky beyond that.
Let's look at the end/beginning of the last four quarters on a daily chart of the S&P:
S&P Daily
Point A is the end of 2009/start of 2010. The last week of the year is almost always slow with so many traders away and most people having done their buying and selling for tax purposes in advance. Meanwhile, note that we did start moving once January hit. That one isn't rocket science as there are several factors going on.
Point B is the end of Q1/start of Q2. See how we went flat for a couple of days at the end of the quarter (almost a week); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES then ran when the quarter started?
Point C is the end of Q2/start of Q3. The end of Q2 was the exception, as the market was still moving around wildly until the last day of the quarter. But, as I already showed, we did move...up...sharply once the next quarter started.
Point D is now. We just suffered through five horrible days and came out unscathed. This next week is a good time to concentrate.


Tradesight Stock Picks Review from Thursday, September 23

NVDA opened just above the trigger, so no play, but worked great.
ESRX worked:
ESRX
AMCC gapped under the trigger, filled the gap, then triggered and worked:
AMCC
ATLS gapped under the trigger, no play.
CHKP gapped down but opened just above the trigger, swept, and that was that:
CHKP
In the Messenger, AAPL worked great:
AAPL
AMZN worked great:
AMZN
BIIB worked:
BIIB
Rich's LVS short worked:
LVS
His AAPL short in the afternoon worked for almost a point:
AAPL


A Night of Scalping...

Lots of little winners on calls and scalp calls based on what I said up front were pretty limited setups for the night. See GBPUSD, USDCAD, and NZDUSD below.
I put a note in the Messenger today, but I will repeat here. As we draw closer to the launch of the Tradesight 4.0 website, you will start to see some promotional emails and newsletters go out. There are two price changes on the new site (Swing and Forex). The main Forex service is going up $20 per month to $149. This will NOT affect current subscribers at all. You will continue to get the $129 rate indefinitely, as will anyone that signs up before the new site is in place (sometime before Halloween). Also, the Total FX package (the one that includes the Seeker/Comber for advanced active traders) will also go up $20 to $219. If you are currently an FX subscriber ($129 per month) and later want to bump to the Total FX, we will still allow that upgrade to the existing $199 price (instead of the new $219). No rush. This is not about current subscribers. This is related to some new relationships and items that Tradesight has recently entered going forward. We like you guys just the way you are. ;-)
New calls and Chat tonight.
24 Hour EUR/USD
EURUSD
24 Hour USD/JPY
USDJPY
24 Hour GBP/USD
Triggered long very early at A, hit first target at B and beyond. Added additional call later, triggered short at C, hit first target at D, second half stopped:
GBPUSD
24 Hour USD/CHF
USDCHF
24 Hour USD/CAD
Perfect Value Area move from A to B:
USDCAD
24 Hour AUD/USD
AUDUSD
24 Hour NZD/USD
Scalp Idea in the Messenger early yesterday evening triggered over UBreak at A, hit R1 exactly at B. Although that's about all you want out of a scalp, just note how well it later used R2 at C:
NZDUSD
24 Hour GBP/JPY
GBPJPY
24 Hour EUR/JPY
EURJPY
24 Hour GBP/CHF
GBPCHF


GBPUSD Winners in Both Directions

At Tradesight, there is a reason that we make two calls every night. It isn't our job to guess whether the US Dollar is going to get stronger or weaker. We should have trades in place for either option. This worked to our benefit last night as we collected over 100 pips (and still going on one trade) without having to watch the market. Here's the summary from our daily report:
A nice night based on our calls in the GBPUSD. First, it triggered short early at A, which would be for half size due to the time of day, but it came back, never stopped (stop was over black line); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES gave you another entry chance at B, and hit the first target at C. We adjusted our stop to breakeven on the second half and that stopped overnight. The long call triggered at D, hit first target at E, and we still have the second half with a stop under 1.5525, which is holding nicely in the money:
GBPUSD