How to Trade Historic Volatility | August 24

Experienced day traders loved it, rookies got clobbered.
What made the difference?

Yesterday was a trading day for the ages…
If you plan to trade historic volatility you better bring your “A” game.
The daily and weekly charts were off the table, they didn’t matter.

Those who were prepared, had definite reference points.
Exact levels to trade around.

Normally that would be the previous day’s high and low, and moving averages.
Yesterday wasn’t normal.

Here is the game plan for historical volatility:
The open price indicator. This is today’s order flow. The edge right now.
Is price trading above or below this print?

The bias of the current hour.
Is the current hour green or red?
This is your main trend in the chaos.

Drop down to lower time frames for entries.
If you normally use 15 minute candles, you are late.

Lower share size to compensate for wider swings.
Expect to miss trades if you are using stop limit orders.

Use limit orders above the market to buy, below the market to sell. (you will get price improved if the stock is liquid but can’t get a worse fill than the limit price)

Stock Market Today: Map of the S&P 500

(click the map for a full view)

trade market volatility

Day Trading Game Plan: The SPY ETF Chart

Stock futures (6am EDT) are set to open 40 handles higher. I don’t see the volatility we had yesterday but relative to “normal” price action we will see plenty of solid day trading again. The market is setting up for tomorrow to be a consolidation.

(click the chart for a full view)

trade market volatility

Stocks to Trade | Tuesday August 25, 2015

Pete’s Notes:

  • Not a market for new traders.
  • Part-time swing traders should be in cash. The swings are too volatile for most.
  • Daily and weekly charts are off the table. (for most stocks)

Charts in Focus

Schlumberger Limited SLB

SLB broke support this week (as did most of Wall St.) but this stock was already on it’s way lower. Look for the first sign of weakness here for a sell-short.

(click the chart for a full view)

trade historic volatility

Earnings in play today > 1M avg shares: MACN, BBY, BHP, DSW, TOL

Bullish Ideas ATR/Volume/Price: BXLT, TEVA, TJX, RAI

Bearish Ideas ATR/Volume/Price: tasr, yelp, qrvo, viab, biidu, jd, juno, myl, gpro, feye, dvn, sndk, bhi, clr, qihu, baba, twx, dis, grub, hal, cvx, kss, m, cop, tsla, cbs, isis, aapl, lvs, ir, mjn, lyb, oke, xom, vtr, hes, de, jpm, dow, cern, slb, lrcx, unp, etn, apa, mon, apc, utx, eog, mmm, hog, cat, oxy

Weak Stock Weak Close: all, ar, bhi, cog, dvn, wy

Strong Stock Weak Close:

Weak Stock Strong Close: aapl, intc, hpq, baba, twtr, dis, qcom, cvx, yhoo, kmi, jd, cop, aig, csx, wfm, gps, nov, bidu, apc, utx, scty, nbl, ntap, jci, cbs, lvs, ca, lyb, lltc, kors, kss, clr, pwr, ir, mchp, yelp, mar, mjn, do, rax, isis, juno, grub

Strong Stock Strong Close:

20 day Breakdown: abt, aer, all, ar, bhi, cog, eog, fast, hes, kim, lly, ncr, nfx, oke, pcg, stwd, vtr, wdc,

20 Day Breakout:

2x Normal Volume: 208 stocks fit this criteria today,,,

Watch List Longs: TJX, TWC,

Watch List Short: bhi, dis, hal, cvx, kss, ms, cop, met, all, abt, xom, slb, wmt, bby, wynn, sndk, m, lvs, hpq, qcom, wmt, txn, intc, ntap, lltc

Inside days:

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 How to Trade Historic Volatility | August 24

After historic 1,000-point plunge, Dow dives 588 points at close

After an unprecedented 1,000-point decline at the open on Monday, the Dow closed with a loss of nearly 600 points.

It was an extremely turbulent day for U.S. stocks driven by deep fears about China’s economic slowdown. Stocks staged a comeback that nearly brought the Dow back into positive territory but that ultimately failed.

The 588-point decline was the worst for the Dow since August 2011.

Global fears about China’s economic slowdown are shaking stock markets around the world for a second week in a row. The wave of selling knocked the S&P 500 into correction mode for the first time since 2011 and the Dow to its lowest close in a year and a half.

Within minutes after the opening bell, the Dow plummeted 1,089 points. That is the largest point loss ever during a trading day, surpassing the Flash Crash of 2010.

“We have not seen this level of full-blown panic in markets for quite some time,” said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm.

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