SETUPS AFTER THE BOT BO

LOOKING at after hour news, and we finally see some big pops on earning news.  You may recall, in a prior blog we were looking for earnings to be favorable this QTR, allowing the markets to pop higher.  Today was a nice bull day, and we need some additional follow up by new money entering the markets.

Bull or bear, traders are always looking for the expected, and the surprise.  In our case, the expected is a BO of a BOT level, followed by a trend.  After the BO, then what?

A valid question.  One could hold for the +5 to +10, baring a pull back (PB) or reversal that breaks the TL, or one can look for additional setups, with the objective of obtaining additional profits with in the BO play.

Tomorrow, we will have a special webinar between 8 and 12 noon, EST.

Today we see the flag and bracket BO plays after the BOT BO Long.  A simple, and general rule for BO's: go with the direction of the BO candle, holding until profit targets hit, or when a PB or reversal breaks a TL, or hits a 50CB level.


TODAY:  TF AND THE ES


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For the TF, we see the standard setup at the long BOT (LB) breakout (BO) for the long, followed by a flag.  The trend lines (TL) for a flag or bracket is similar:  connect the initial lows and connect the initial highs.  This can be a little easier after a control bar (CB), as seen in the bracket.

The plays that should receive your attention:  long  bar 1 (b1) BOT BO;  short b19 BO;  Long b48 at the 50CB BO, or wait for b50.

The ES had a large CB in the pre open.  This 50CB level above the EMA was a quick entry for the follow up long at b2 LB BO, not to mention an extra 3 points in profit.

We see an inside body bar (IB) at b11, which is being tracked for acceptability as a reversal signal.  The flag BO is confirmed by b20.

Next, we had a channel.  The preferred play is to wait for the BO, thus avoid some of the churn inside the channel.  Traders will trade inside the channel.  As a minimum, look for a 50CB.  PA was bracket with a long at 13.5 and short at 10.5.  B45 was a FBO that stopped above our short target.  The long hit on b46, with exits at 14.5 and 15.25 by b48.

It would be interesting to know how many traders shorted b49,  since  the b50 BO seemed to have an extra kick to it, as if there was some short covering hitting.

B52 would be the 50CB exit, and would provide a later entry at b62 or 63.