Does anyone follow this guy ?
9/18/98
The Paragon Traders' Report
By Rick Tomsic
The following report contains excerpts from The Paragon Traders' Report, which
is published daily. The Paragon Traders' Report is a very detailed tool for
OEX, S&P and T-Bond traders. For information on The Paragon Traders' Report,
or to subscribe, please call 614-792-2690 or eMail info@paragontrd.com
Please visit paragontrd.com for subscription information.
The Paragon Traders' Report Weekly Outlook
Market Recap for the Week of September 14 through September 18
If you are a baseball fan, last week was certainly another week for the home
run. Both Mark McGwire and Sammy Sosa continued to blast balls out of the park
shattering all records. The fight to retrieve Sosa's homerun blasts in Chicago
resembled the S&P pit during the recent massive decline. While McGwire and
Sosa looked for the long ball, so too did many S&P and OEX traders. In the end
the traders struck out as the market refused to move for much of the week.
Let's take a closer look at how the week unfolded.
The December S&Ps closed the previous week at 1023.00. This close was due
mainly to a massive rally on Friday following the release of the Starr report.
The strength that began on Friday carried over into Monday as the S&P gapped
open to 1033.00 and rallied to a high of 1052.00. We told our fax subscribers
that a close above 1040.00 would put the bulls in control of the market. This
was certainly the case as over the next two days the S&Ps rallied to a high of
1060.00. The massive short squeeze late in the session on Wednesday forced the
short sellers to exit the market abruptly. This rally was the fast ball down
the middle, which sent the bears looking for the home run back to the dugout.
After forcing out the bears, the market was free to fall on Thursday. The S&Ps
had rallied 83 points in just 4 days and had an unfilled gap at
1024.00-1030.50 below the market. The massive rally came to an end Thursday
morning as the S&Ps gapped down the limit on major weakness in the European
markets. Thursday's low was recorded at 1025.00, just one point above the gap.
Friday was a non-event. The S&Ps traded in 12.50 range and tested our
projected support level at 1021.00. Neither the bulls nor bears hit home runs
last week. Remember, the market will look to frustrate the most traders. With
the market again ultra compressed, we expect next week's action to mirror some
of the mammoth shots McGwire delivers. Do not be caught looking at strike
three. The fast ball is coming down the middle of the plate next week.
Market Outlook
Last week the S&Ps oscillated up to 1060 and back down to 1021.00 before
closing the week just 2 points below where they opened. The market is now
again ultra compressed. We are now on the lookout for another major move. With
the end of the quarter over we would expect this move by late next week. It
will be very important not to attempt to fade the move. The current
compression has stored a massive amount of potential energy. When released
this energy will be extremely hazardous to those traders on the wrong side. A
close above 1060 will be very strong with a close below 1006 negative. We will
continue to provide detailed daily updates via our Paragon Traders' Report.
Have a great week.
Daily Highlights from The Paragon Traders' Report for the week of September 8:
Monday September 14:
"The 1019-1027 level should be a major barrier unless the bulls are very
strong. The strength Friday can not be denied. The bulls must demonstrate
their resolve early today."
Friday Sept 11 the Dec S&Ps rallied off the significant 976.00 low to close
the week at 1023.00. This strength could not be denied and carried over into
Monday's trading. The S&Ps got a major boost as the Asian and European markets
were up strong. This strength caused the S&Ps to gap up setting an early low
at 1032.00. The high for the day was set at 1052.00, 75 points above Friday's
low. This was an extreme move in just two days. Despite the massive move
higher the bulls were able to close the S&Ps above the key 1040.00 level. The
bulls were in control and making the bears lives miserable.
Tuesday September 15:
"The intraday breakout parameters are for a move 8.50 pts above or 8.00 pts
below the open. Be especially careful if these parameters generate entry
points near significant pivot levels."
Following the two-day move, which totaled 75 points on the S&Ps the market,
began to compress. This compression would be a dominant pattern for the
remainder of the week as the option specialists capitalized on the hopes of
both the bulls and bears. The S&Ps closed Tuesday at 1046.50, up 6.20 points
on the session.
Wednesday September 16:
"Tuesday completed the second consecutive compression pattern. The last such
occurrence was on Aug 19-20. Such patterns are the prelude to major moves."
The market continued to coil on Tuesday and released some this pressure
Wednesday. Wednesday's activity was obviously expiration related as the S&Ps
gyrated wildly over the last hour of trading. The massive short squeeze late
in the session forced the last remaining bears looking for a down draft exit
the market.
Thursday September 17:
"The gap remains below the market at 1024.00-1030.50 with another gap above
the market 1085.00-1089.00. With the S&Ps so overextended a pause in the
upward action is likely."
The short squeeze on Wednesday, the gap below the market and the three-day
move of 83 points was enough to convince us the market needed to pause at a
minimum. OEX traders who were forced out of the market on Wednesday were
further aggravated Thursday morning when the S&Ps gapped down the limit 27
points. As expected, the gap at 1024.00-1030.50 was the target. The December
S&Ps hit a low of 1025.00 and closed the session at 1029.50, well below the
1040.00 pivot level.
Friday September 18:
"Today is expiration day and anything is possible. Sometimes trends develop
on these days but the odds are against. Therefore, unless a very clear
situation presents itself it is better to observe than get caught in
whipsaws."
The compression that started earlier in the week continued on Friday.
Remember, the market will seek to frustrate the most traders. The S&Ps opened
the option expiration week at 1033.00. Both the bulls and the bears looking
for the home run were disappointed as the S&Ps closed the week at 1031.00,
just two points below the open.
Past performance is not indicative of future results.
***************************************
ABOUT THE PARAGON TRADERS' REPORT
The Paragon Traders' Report is published by Paragon Trading, Inc. The report
covers the OEX, S&P 500 futures and T-Bond futures. The report is sent out
each night after the market is closed. Subscribers will receive the report no
later than 5:00 a.m. eastern time the following morning. The daily report is
very detailed in nature and should serve as a trading tool for the following
trading day. The report is two pages and is broken down into the following
sections:
HIGHLIGHTS - This section will list what the current day's trading range was
vs. the projected range from the previous day's report. It will also focus on
ideas from the previous day's report that were of interest during the current
trading day.
RECAP - This section is a detailed recap of the day's trading activity. Each
trading day is reviewed to gain a better understanding of the market
internals. This section is a excellent trading tool. In each report we examine
what our indicators told us before the day started and how they actually
worked.
The trading approaches used in this report and reviewed in this section are
purely technical. Some of the tools used for S&P, OEX, and T-Bonds include
high-low tests, short term price patterns, futures spread, specialists option
pricing, divergences between T-bonds and S&P futures and the intraday tick.
These tools will be referred to as the tape action.
The techniques incorporated were developed from watching the market from the
open to close, tick-by-tick, each and every day. Several proprietary methods
to anticipate market reactions are also included in this section. The main
purpose is that "a good trader is always learning." We review each day to
always try to become better traders.
THE BIG PICTURE - This section provides an overview of the current market
environment and details specific parameters to measure this environment.
ECONOMIC REPORTS - This section lists the major economic reports due for
release for the next trading day. As short term traders it is very important
to know the release times of the major economic reports that can influence
market action.
TRADING PLAN - This section details a trading plan for the next day. In this
section various types of potential trades for the OEX, S&P 500 futures and T-
Bond futures are discussed. The types of trades include both day trades and
position trades. This section is meant to be used as a tool to help traders
enter and exit the market. We list several degrees of expected moves in the
markets each having its own probability. Traders can then decide how much risk
they want to take and execute their trades accordingly. This report is not a
black box approach to trading. The report is intended to be used as a tool to
learn various techniques for trading the OEX, S&Ps and T-Bonds.
THE NUMBERS - This section summarizes the trading parameters and numbers for
both the S&P 500 futures and T-Bonds. This section will include but is not
limited to the following:
- The day, 3 day, week and 4 week: (High, Low, Close, Highest Close, Lowest
Close and Range)
- Daily, minimum, and maximum projected ranges
- Daily and 3 day probability ranges
- Momentum Inversion Index
- 3 day patterns
- Daily patterns
- OB/OS readings
- 1, 5, and 10 day Trins
- Globex matrix
- Short term signals
- Intermediate signals
- Various moving averages
This section provides a useful table to use during the trading day. Various
trades will be based on the numbers in this section and will be described in
the TRADING PLAN section.
In summary, the Paragon Traders' Report is a complete traders tool not simply
a black box approach. It is meant to help traders understand, on a daily
basis, how the market should perform. When the market does not perform as
indicated we review the activity to see if the market is providing clues to
its direction. To be a successful trader one must constantly learn new
techniques. The Paragon Traders' Report will help you keep your trading edge.
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Paragon Trading, Inc. is based in Powell, OH. Paragon's primary goal is to
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and tools, you are at a disadvantage. One way in which Paragon brings current
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Report. Paragon is constantly striving to bring the most innovative trading
ideas to its subscribers.
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Past performance is not indicative of future results. |
