Welcome to The Discovery Trading Group

 Announcements  Comments Off on Welcome to The Discovery Trading Group
Nov 292011
 

We are a group of professional and amateur traders founded by principals of a quantitative research firm which develops strategy and periodicity diverse programs and risk modeling tools. Our own internal process involves using this webspace as a collective resource for sharing both discretionary thoughts during intraday sessions and as a sort of virtual think tank for our ongoing quant research. A big part of that research has consistently shown that the ‘Holy Grail’ of the purely mechanical, single market intraday trading strategy that produces near linear returns without significant ongoing adaptation DOES NOT exist. As such we have found that for most traders pursuing single market intraday strategies, an adaptive, risk management focused discretionary approach is likely to bear the most fruit. Ironic, given that rigid, purely mechanical systems are what the vast majority of retail traders (including us at one time) seem to be in relentless pursuit of. 

In the spring of 2010 we created a private, member only forum behind the blog devoted to our ongoing discussions related to discretionary analysis of market structure, price action and order flow to like minded retail traders as a sort of experiment. Since we have always found the format in which we use this space privately to flesh out ideas to be so beneficial, we wondered if it might be even more fruitful to increase the sheer numbers of those participating in this process and with that, DTG as it exists today was born. By any measure, the experiment has been almost unfathomably successful for us in terms of its role in keeping us sharp in whatever discretionary or quantitative work we happen to be engaged in at the time. Sharing our experiences and interacting with the greater numbers continues to spark new ideas for all of us, making our little experiment a huge win on all fronts in our book. For information about the types of trading which are the foundations for what most members pursue here, follow this link:

Methodology Framework

 Posted by at 11:24 am

03/27/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 03/27/2024 ES Trade Plan Worksheet
Mar 272024
 

Durable Goods Orders rebounded in February, up 1.4% from January.  Home prices rose 6% in January, the largest increase since 2022.  Meanwhile Consumer Confidence for March dipped a little to 104.7 from February’s revised 104.8 but the “Expectations Index” fell to 73.8 in March, down from 76.3 in February.  A reading below 80 is a recession forecasting indicator.

Former President Trump’s social media company Trump Media & Technology Group Corp. (DJT) finished up 16% on it’s first day of trading to a market cap around $8 billion.  Trump’s value is around $5 billion.

An SEC filing showed Trump Media lost $49 million in the first 9 months of last year on ad revenue of $3.4 million.  Short interest in the DJT is about 11% compared to an average of 3% to 4% for most public companies.

Krispy Kreme shares jumped 39% after a deal to rollout their donuts to McDonald’s nationwide by the end of 2026.  A test of the concept in 160 McDonald’s in 2 Kentucky cities “exceeded expectations”, adding to breakfast sales and snack sales all-day long.

Krispy Kreme will deliver 3 of their most popular doughnuts: glazed, chocolate with sprinkles, and chocolate iced kreme filled to McDonald’s 14,000+ “points of access” locations every day.  McDonald’s had discontinued their apple fritter, blueberry muffin and cinnamon roll from all restaurants in 2023.

S&P Global downgraded 5 regional banks to “negative” from “stable” on Tuesday: First Commonwealth Financial, M&T Bank, Synovus Financial, Trustmark, and Valley National Bancorp.  The reason is the banks’ exposure to commercial real estate loans.  The downgrades bring 18% of the banks S&P rates to “negative.”

The Port of Baltimore has been shut down by a ship that knocked down large sections of the Francis Scott Bridge early Tuesday.  Colonial Pipeline has paused nominations to ship fuel from the Baltimore port.  The Baltimore port shutdown will likely increase demand on Colonial shipments and raise gasoline prices up and down the US East Coast.

Corporate earnings before the open include Carnival Co (CCL) and Cintas (CTAS).  The economic calendar is light with Crude Oil Inventories @ 10:30am ET.

Volatility continues to shrink in the holiday shortened trading week.  Expect muted volatility to continue today.

Whale bias is bearish into the US session open on much heavier than recent overnight large trader volume.

 

 Posted by at 3:52 am

03/26/2024 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 03/26/2024 ES Trade Plan Worksheet
Mar 262024
 

After the S&P 500 passed Oppenheimer’s 2024 forecast of 5200, the firm updated their forecast Monday to 5,500 which is only 5% above Friday’s close.  Oppenheimer now has the highest forecast of the major banks.  UBS & Bank of America are forecasting 5,400 while JPMorgan has not changed their 4,200 forecast.

Some analysts think the stock markets are in a bubble, which may have been the case earlier in the year when the Magnificent Seven dominated market movement.  However, during this earnings cycle, Tesla (TSLA) and Apple (APPL) have stumbled while the S&P 500 market rally has widened out to include many other companies.

Global hedge funds have been shifting their portfolios to European stocks as US stocks are deemed “too expensive.”  The S&P 500 trades at 21 times earnings while the Euro STOXX 600 trades at 14 times earnings.

For the first known time, a bird flu was found in US livestock.  Last week Minnesota officials announced that goats on a farm with infected chickens had an outbreak.  The highly contagious avian influenza has now been identified in dairy cows in Texas, Kansas, and New Mexico.

Milk from the sick cows is being diverted and destroyed which could cause milk prices to go up.  The livestock are expected to recover on their own.

The aviation giant and the largest US exporter Boeing (BA) is in crisis.  After four misplaced bolts led to an Alaska Airlines 737 Max 9 fuselage ripping open at 16,000 feet and the Max crashes of 2018 & 2019, Boeing faces dozens of civil lawsuits and possible criminal liability, FBI and DOJ investigations, a tarnished reputation, declining margins, a tumbling stock price, and a leadership vacuum.

The Boeing board has turned over and CEO Dave Calhoun just resigned, effective at the end of 2024.  BA stock rose 1% on Calhoun’s announcement but it will take years for Boeing to rebuild.

Corporate earnings before the bell include McCormick & Company, Inc. (MKC).

The economic calendar is full with Durable Goods @ 8:30am ET, HPIs @ 9:00am ET, and CB Consumer Confidence & Richmond Manufacturing Index @ 10:00am ET.

Volatility continues to shrink in a shortened holiday week Fed bull run last week and a record setting quarter on tap with little news to drive the markets one way or the other.

No Whale bias as overnight large trader volume was both light and mixed.

 

 Posted by at 5:07 am