Hilbert Sine Wave Pullbacks
Emini closed up 48.50 points at 1,370.25 today. Wow, what a day. Trend days usually close on their highs and today was no exception.
Hilbert Sine Wave (Emini 699 tick)
Plenty of entry opportunities on pullbacks. I use the Hilbert Sine Wave to identify these, but any stochastic would work on days like this.
Where to from here? After a huge day like today the market will likely consolidate tomorrow. Probably cyclical activity rather than any strong trend moves.
There was some high volume (churn) at the end of the day and so we could see some profit taking until support is reached. The high volume will come back in once that support level is identified. Good luck with your Emini trading.
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Hilbert Sine Wave Still To Complete Downtrend
Hilbert sine wave reminder today. You'd have thought with a 400 point Dow rally that we were in an uptrend now. The chart below shows that rally just led to a pullback move in the unfinished downtrend.
Hilbert Sine Wave (Emini 81 minute)
Breaks into trend usually finish with a final cyclical turn. This is my usual "completion" pattern (labeled END using the Better Sine Wave indicator). And boy do I have trouble explaining this one - the best thing is to watch the Hilbert Sine Wave video. I hope the annotations on the chart above help.
The current down trend cannot be considered over until we have a cylical low cross. There are exceptions, but in general it is one of my most reliable patterns. I've likened it to a final Elliott 5th Wave push.
Emini Premium (June - March 2007)
The Emini rolled-over at the close of trade today. Tomorrow we start trading the next front month - June 2008 (ESM08). The chart above shows the usual premium between the front month and the nearby month. Last year at this time it was about 12 points.
Emini Premium (June - March 2008)
The current premium between the June 2008 contract and the March 2008 contract is only 2 points. This is very worrisome, especially when you combine this with the recent bearish professional position shown in the latest Commitment of Traders report.
I cannot help but think we are likely to test Monday's low of 1272 and then maybe test January's low of 1262. Let's see how this one plays out.
Watch the Hilbert Sine Wave video here. Good luck with your Emini trading.
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Hilbert Sine Wave Pull Back
Finally got around to updating my Emini day trading methodology page. The previous version was unclear because it was mixed up with commentary on my swing trading system. Please take a look - there's also a pdf version if you want to read it later.
Hilbert sine wave and 27 minute Emini chart below. The 27 minute chart is used because there are exactly 15 bars per trading day.
Hilbert Sine Wave (Emini 27 minutes)
From yesterday's post "still waiting for an 'end of trend' move in the 27 and 45 minute time frames (ie. final push down)" and Monday's post "any strong rallies will be sold again and we're likely to see more trading range activity".
Well today the rally back to 1,345 got sold and the Emini was pushed down to 1,320 - a previous area of support. I thought the Emini might have dropped further but it started to rally, even before the Hilbert sine wave crosses. In the after market we're already back up at 1,342.
Which way now? I think we will close the gap at 1,364 - eventually. But I don't think we've spent enough time basing. I can't believe the Professionals are going to let the Emini run away like that. I'm guessing we'll have another push down.
You can see some Hilbert Sine Wave videos here. Good luck with your Emini trading.
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Hilbert Sine Wave Trend Example
Hilbert Sine Wave trend example today. Just a quick post to show how the Hilbert Sine Wave can be used to define the beginning and end of trends - any market, any time frame. This is Google (GOOG) on a daily chart.
Hilbert Sine Wave and Google (Daily chart)
For simplicity, I've just shown the support and resistance levels (red and white dotted lines) that are generated by the Better Sine Wave indicator. Trend moves occur when these levels are broken and follow through. The end of a trend move is typically signaled with a final cyclical turn.
On the chart above, the break into trend moves are signaled with a red or white dot - red for up trend, white for down trend. The end of the trend moves are signaled with the "END" text automatically printed on the chart.
In this Google example the up trend started with a break at $535 and continued until exhaustion at $714 - a 33% move up. You could have shorted from the end of the up trend at $714 or waited for confirmation of a down trend at $616. This down trend continued until exhaustion at $467 - a 24% move down from $616.
I get a lot of questions about the Hilbert Sine Wave - I don't think I'm very good at explaining how it works. I've tried my best in these Hilbert Sine Wave videos. All I know is, I couldn't trade without it.
Hope everyone shorted the Emini at the break below 1,375 highlighted in yesterday's post. Good luck with your Emini trading.
Wednesday 13 February 2008Hilbert Sine Wave Down Turn?
Hilbert Sine Wave has turned down on the 135 minute time frame - my preferred time frame for Emini swing trading. Is it time for a cycle down move?
Hilbert Sine Wave (Emini 135 minute)
Today was a very strange day on the Emini. The 1,340 level was tested during the overnight session and we made another run for the trend line break - as expected. The Emini broke above 1,365 but only made it as far as 1,370 before selling appeared.
What troubles me is that the TRIN indicator was very bullish, with an adjusted reading of +160, but both the volume and range were smaller than yesterday. Typically TRIN readings above +100 are large range, high volume up days - and that's what we need to break the down trend line convincingly.
All of this makes me think that we might not make the gap close at 1,378 and the 135 minute Hilbert Sine Wave down cycle will kick in. A break below 1,360 tomorrow would start to make this scenario more likely.
There are a couple of new Hilbert Sine Wave videos added here, if you're interested. Although the code is for sale I hope my readers also realize there's a lot of free code and trading information available on the site too. Good luck with your Emini trading.
Tuesday 29 January 2008Hilbert Sine Wave Cycle Turn Near
Hilbert sine wave cycle turning point finally approaching. My primary swing trading time frame is the 135 minute Emini chart (exactly 3 bars per day). Back at the beginning of January, the Emini broke below the last cycle low turning point - signaling the start of the last down trend move.
Hilbert Sine Wave (Emini 135 minute)
The Hilbert sine wave indicator has now crossed - signaling a cycle top is close by. This pattern of retracing into a cyclical turning point after an extended trend move is very consistent. I have likened it to an Elliott Wave 4 to 5 pattern before. In addition we appear to have distribution volume today with resistance around the 1,370 level.
Click here to read more about the Hilbert Sine Wave. Good luck with your Emini trading.
Thursday 17 January 2008Hilbert Sine Wave and Emini Day Trading
I'm a big fan of John Ehlers Hilbert Sine Wave. The Emini chart below shows how the Sine Wave caught 4 short entries (5 if you count after hours) day trading today.
Emini and Hilbert Sine Wave (2,097 tick)
When using the Hilbert Sine Wave I've found that tick charts work best. By contrast, for volume patterns I've found that time based charts are better.
When day trading I use multiple time frames - 233 tick, 699 tick and 2,097 tick - and I include the after hours data in tick charts. The 233 starting point is chosen because it's a fibonacci number. Then each higher time frame is 3 times the lower time frame. So the 2,097 tick chart is 9 times (3 x 3) larger than the 233 tick starting point.
The usual multiple for moving from lower to higher time frames is 5. This was probably chosen because of the daily to weekly relationship; it's also close to the weekly to monthly relationship. However, in practice I've found that 3 times is faster at identifying significant events coinciding on multiple time frames.
The day trading entry points shown on the chart above coincide with turning points on the Hilbert Sine Wave shown on the lower pane. As you can see, when the trend is persistent the Hilbert Sine Wave does a great job of catching pullbacks in trend.
Emini Exhaustion Volume and TRIN Divergence
Today we got the exhaustion volume or volume climax that we were looking for yesterday. The Better Volume indicator colors the volume bars red when both the bar's range and volume are high, like today.
In addition, we also got a bullish divergence warning signal on the Better TRIN (trading index) Indicator. The adjusted TRIN reading was -171 which is better than the -238 of a couple of day's ago, yet we made a lower low - setting up a bullish divergence warning signal. Conditions appear to be in place for a temporary halt to the decline.
Good luck with your Emini trading.
Monday 19 November 2007Hilbert Sine Wave on 135 Minute Time Frame
Just a quick post today on the Hilbert Sine Wave. My primary time frame for swing trading the Emini is the 135 minute chart (exactly 3 bars per trading day). On Monday we got a cross-over in this time frame and the completion of the down trend move. See the chart below.
Hilbert Sine Wave 135 minute
I have written before on these Hilbert sine wave "complete" moves. They signal the end of a trend move which is usually followed by a retracement and a return to cyclical trading patterns.
The key point is my post on Friday about Stopping Volume and strength returning to the Emini market was too early - I should have waited for the 135 minute Hilbert sine wave to cross and this down trend to "complete".
Good luck with your trading.
Friday 28 September 2007Hilbert Sine Wave and Cyclical Top
The Hilbert Sine Wave crossed on Friday and signaled a cyclical turn down. The 135 minute chart is my primary time frame for swing trading the Emini. In the last year the 135 minute Hilbert Sine Wave had been invaluable in identifying turning points. Here's Friday's chart:
Hilbert Sine Wave on 135 Minute Emini Chart
Emini cycle highs and low played out nicely from the end of August to mid September. Then we had the Fed Rally that took us into a Trend mode. This Trend moves typically ends with a pull-back followed by a Completion move. These Completion moves are labeled "END" automatically using TradeStation code.
The Completion move does not mean we're in a down trend now. Far from it. Looking at the higher time frames (daily and weekly), we continue to be in an up trend. However, it does mean that tradeable Cycle moves should return to the market.
Given we're in an uptrend the Cycle Lows should be better entry points than Cycle Highs. But I'll still take the Short signals that the Hilbert Sine Wave gives.
Wednesday 11 July 2007Hilbert Sine Wave and Swing Trading
The Emini has already retraced 50% of Tuesday's drop. Monday's close was 1,542.50, Tuesday's close was 1,520.00 and today's close was right in the middle at 1,531.00. In yesterday's Emini update I guessed that the correction was not going to be very severe. Right now it looks like it was a one day event.
Will the rally continue? My primary time frame for swing trading the Emini is the 135 minute chart (exactly 3 bars per trading day). In that time frame we're about to have a cross-over in the Hilbert Sine Wave. The chart is shown above. My best guess is that the cross-over is early and we will retrace and consolidate tomorrow.
The Hilbert Sine Wave (courtesy of John Ehlers) has done a remarkable job at catching turning points in the Emini. A long string of successful trades is discussed in this post (10 out of 10). In the chart above you can see the first 5 turning points are nailed, although the last 2 did overshoot with early cross-overs. You can read more about John Ehlers and the Hilbert Sine Wave here.
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