Gap Probabilities for Monday 7/19/2010

Gap Probabilities for Monday 7/19/2010

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Trade at your own risk!

These Probabilities Have lead to 100% Winning Trades so far since June 2010!

Please note that the above factual statement does not mean that it is mathematically possible for this to continue for ever.  Having said that, I believe this system will help you gain remarkable advantage over random trades.

For help with using this guide visit Fading Opening Gaps 101.

For trading in general, the best place I have found so far is  
LBR Group 
headed by market wizard Linda Raschke. Beware that most other sites are scams.

H, O, C, and L refer to High, Open, Close and Low of yesterday

Yesterday's Forecast and Review

Yesterday's Forecast:

Before Gap
The only high probability area confirmed by both structure and timing are the H zone (above 1095.50) for short.
Stop is 6.

After Gap

According to Table - 3, if the market opens above the open(1091.25 ) and it closes the gap at 1090.25, then there is high probability that the market will continue going down another 4 points.

Stop is 6.

Yesterday's Review:

Before Gap - ES opened at 1085.75 in C-L zone. This zone was not any of the high probability zones.  So no trade for today.  It is noticable that the price was in the high probability zone just before the open but the gap faded before the market opened as it has been doing recently.
After Gap -  No trade.

Note: There were two very good news for market, Goldman Sacks settlement and capping of oil leak.  Even these news could not make the market move up.  So based on this, short gaps are probably more promising for Monday.  Have a nice weekend! and please help me get more audience for this web site by sharing it with other people.   Thanks!!!

Today's Forecast Summary:

Before Gap
According to Table -1, except for zone H-O, every other zone is great for gaps in both direction specially if the market opens below the open of Friday(1085.75).  I will definitely take the trade in C-L zone(1063.25 to 1059) because this is the area that Table -2 also agrees with Table - 1.  Because the probabilities are great in the O-C and L zones, I may also take some trades in these zones.
Stop is 9.

After Gap
According to Table - 3, if the market opens above the high (1086.50 ) and it closes the gap at 1063.25, then there is descent probability that the market will continue going down another 4 points.  The problem with this setup is that the sample size is very small and not trustable.  I will not take this trade.
Stop is 9.

Today's Data: 
Darker green for signals indicates  a higher probability.

ES pivot points:           Signals:
(based on prior day's data)     (based on today's opening price)

R3:	1124.50
Fib 1.618:	1103.50
R2:	1097.00
		SELL
Fib 1.272:	1094.00
High:	1086.50
Open:	1085.75
		SELL
R1:	1080.00
Pivot:	1069.50
Close:	1063.25
		BUY
Low:	1059.00
		BUY
S1:	1052.50
Fib 1.272:	1051.50
S2:	1042.00
Fib 1.618:	1042.00
S3:	1014.50

Table - 1        Gap Fade Probabilities (based on Market Structure)

What are these rows and columns? 

Profit Target = Gap Close, Stop = 9 points.

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		1.56	0.35	3.17	2.21	2.00	2.12	1.93
PCT Prof		67%	40%	85%	87%	83%	84%	78%
Avg Loss		$321	$395	$333	$450	$556	$488	$349
Net Loss		$963	$4,738	$6,650	$3,150	$6,113	$9,763	$12,913
Loose		3	12	20	7	11	20	37
Avg Win		$250	$209	$180	$152	$231	$197	$186
Net Win		$1,500	$1,675	$21,088	$6,975	$12,225	$20,688	$24,925
Win		6	8	117	46	53	105	134
Avg P/L		$60	$153	$105	$72	$96	$87	$70
Net		$538	$3,063	$14,438	$3,825	$6,113	$10,925	$12,013
Total		9	20	137	53	64	125	171

Table - 2     Gap Fade Probabilities(based on timing)

Profit Target = Gap Close, Stop = 9 points.

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		1.12	0.36	0.91	2.26	0.89	1.05	0.89
PCT Prof		51%	47%	70%	86%	49%	64%	61%
Avg Loss		$239	$325	$290	$270	$271	$274	$262
Net Loss		$6,213	$2,925	$6,963	$1,350	$10,588	$24,363	$32,525
Loose		26	9	24	5	39	89	124
Avg Win		$257	$133	$116	$102	$254	$161	$149
Net Win		$6,938	$1,063	$6,363	$3,050	$9,388	$25,588	$28,850
Win		27	8	55	30	37	159	194
Avg P/L		$14	$110	$8	$49	$16	$5	$12
Net		$725	$1,863	$600	$1,700	$1,200	$1,225	$3,675
Total		53	17	79	35	76	248	318

Table - 3     After Gap probabilities(based on Market Structure)

Profit Target = 4 points, Stop = 9 points. Conditional probabilities after the gap is filled.
 

Opening Zone		> H	H-O	O-C	C-L	< L	All	All
		Short	Short	Short	Long	Long	Longs	Shorts
PF		1.60	0.75	1.19	0.63	0.95	0.79	1.15
PCT Prof		67%	55%	71%	61%	76%	69%	69%
Avg Loss		$250	$320	$404	$492	$661	$554	$387
Net Loss		$250	$1,600	$14,938	$8,850	$9,913	$19,375	$17,038
Loose		1	5	37	18	15	35	44
Avg Win		$200	$200	$200	$200	$200	$200	$200
Net Win		$400	$1,200	$17,800	$5,600	$9,400	$15,400	$19,600
Win		2	6	89	28	47	77	98
Avg P/L		$50	$36	$23	$71	$8	$35	$18
Net		$150	$400	$2,863	$3,250	$513	$3,975	$2,563
Total		3	11	126	46	62	112	142

Copyright © Ali Mohseni 2010 Charts are created using Tradestation software.