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

1/20/2025 Martin Luther King Holiday

 Announcements  Comments Off on 1/20/2025 Martin Luther King Holiday
Jan 172025
 

US stock and futures markets are closed on Monday, January 20, 2025, for Martin Luther King Day, a federal holiday.  Donald Trump’s inauguration will also take place on Monday.  Normal trading hours resume after Monday’s normal close times.

 Posted by at 10:06 am

01/16/2025 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 01/16/2025 ES Trade Plan Worksheet
Jan 162025
 

US stocks surged higher on Wednesday after strong bank earnings and Core CPI climbed 0.2%, an easing from November’s 0.3%.  It was the first time since July the CPI price growth decelerated.  The report showed vehicle, grocery, appliances, electronics, and rental car prices down while auto insurance, airfare, rent, housing, education, and restaurant prices are up.

The Dow Jones rose 700 points (1.6%), while the S&P 500 climbed 1.8% and the Nasdaq soared 2.5%.  The 10-year Treasury shed 13 basis points, dropping the yield to around 4.65%.  Rate sensitive small-cap Russell 200 Index rose almost 2%.  FedWatch shows markets pricing a possible rate cut in June.

JPMorgan Chase (JPM), Goldman Sachs (GS), BlackRock (BLK), Wells Fargo (WFC), and BNY (BK) all beat optimistic analyst expectations.

A phased ceasefire deal between Israel and Hamas was completed on Wednesday.  The initial phase is 6 weeks which includes gradual withdrawal of Israeli forces from the Gaza Strip and the release of hostages taken by Hamas in exchange for Palestinian prisoners held by Israel.

Taiwan Semiconductor Manufacturing Co. (TSM) projects their quarterly sales and capital expenditures will beat analyst estimates as AI hardware spending remain robust and resilient.  The company sees spending $38B to $42B on technology and capacity improvements, which is about 19% higher than expected.  They predict $25.8B in revenue for the March quarter which is 6% above current estimates.

Corporate earnings premarket include UnitedHealth Group Inc (UNH), Bank of America (BAC), Morgan Stanley (MS), PNC Financial Services Group, Inc (PNC), U.S. Bancorp (USB), MBT Bank Corp (MTB), and First Horizon Corp (FHN).  Earnings after the bell include J.B. Hunt Transport Services, Inc (JBHT) and Bank OZK (OZK).

The economic calendar includes Retail Sales, Unemployment Claims, Philly Fed, and Import prices @ 8:30am ET, Business Inventories, and NAHB Housing Market Index @ 10:00am ET.  Fed speakers include New York Fed President John Williams @ 11:00am ET.

Volatility jumped higher on the CPI reaction.  The ES 5-day average daily range is now 83.5 points.

Whale bias is leaning bullish into the 8:30am ET economic numbers on light overnight large trader volume.

 

 Posted by at 5:56 am

01/15/2025 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 01/15/2025 ES Trade Plan Worksheet
Jan 152025
 

The market focus is squarely on this morning’s 8:30am ET Consumer Price Index numbers, the latest read on inflation.  A resurgence of inflation likely pushes Fed rate cuts out which is bullish for Treasury yields and bearish for stocks.  Currently, it appears inflation has stalled above the Fed’s 2% target.

With gas prices on the rise and food prices ticking up, Core CPI is expected to have risen 3.3% over last year.  Shelter costs, life insurance, medical care, airfares, and lodging costs are keeping inflation stubbornly high.

With the Trump administration taking the reins next week, many economists fear a resurgence in inflation.  Citi economists recently wrote, “Trump’s policies entail a complicated mix of favorable and adverse supply shocks and demand shocks…  Bottom line, the uncertainties surrounding Trump’s policies are significant.”

The Fed’s December meeting minutes also revealed that the Fed is also on edge.  They are worried about the uncertainty surrounding the “scope, timing and economic effects of potential changes in policies affecting foreign trade and immigration…”

Bank of America has revised their outlook to zero rate cuts in 2025 and think the Fed may shift back to tightening this year.

Semiconductor and chip manufacturer trade groups sent a private letter on Monday to President Biden complaining that the new chip export controls were rushed through without consulting the industry.  The groups say the chip export controls will have long-term impacts with economic and international significance.  Some of the new rules appear to reverse previous rules and will greatly impact revenue of US semiconductor companies.

Big Banks kick off earnings season.  On deck this morning is JP Morgan Chase & Co (JPM), Wells Fargo & Company (WFC), Goldman Sachs Group, Inc (GS), BlackRock, Inc (BLK), Citigroup, Inc ( C ), and The Bank of New York Mellon Corp (BK).  Earnings after the bell include Synovus Financial Corp (SNV).

In addition to the CPI numbers @ 8:30am ET, the economic calendar includes Empire State @ 8:30am ET, Oil @ 10:30am ET, and the Fed Beige Book @ 2:00pm ET.

Fed speakers include Barkin @ 9:20am ET, Kashkari @ 10:00am ET, Williams @ 11:00am ET, and Goolsbee @ 12:00pm ET.

Volatility ticked down on Tuesday but the CPI numbers reaction could drive directional volatility today.

Whale bias is leaning bullish into the 8:30am ET CPI numbers on relatively light overnight large trader volume.

 

 Posted by at 6:34 am