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 it’s 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 type of trading that is the foundation for what most members are focused on here, follow this link:

Methodology Framework

 Posted by at 11:24 am

12/02/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/02/2022 ES Trade Plan Worksheet
Dec 022022

Focus is on the 8:30am ET jobs data.  Since job data has been so strong in 2022, Fed speak has focused on inflation data, making those numbers more important.  However, jobs data is still important and could set a direction today.  Fed Chair Powell said last month, “the labor market continues to be out of balance, with demand substantially exceeding supply of available workers.”  Any sign of weakness in this morning’s numbers would be welcomed by the Fed and could trigger a bullish move in stocks.

President Biden plans to sign a bit-partisan bill passed by the Senate last night by an 80 to 15 vote that prevents a “Christmas catastrophe” rail strike.  The bill imposes terms the White House negotiated with rail companies and unions back in September, making it illegal for workers to strike while imposing terms of pay increases, improved working conditions, and healthcare benefits.  A strike was projected to cost the US $2 billion a day and shut down 30% of US freight traffic.

Elon Musk took the stage at a Tesla (TSLA) event and unveiled the company’s long-delayed all-electric semi that was first announced in 2017.  Pepsi (PEP) had ordered 100 vehicles.  No details about the semi’s specs were released.  Back in 2017, the vehicle was announced with a 500-mile range and $180K price tag.

Marvell Technology (MRVL) is down over 6.5% premarket after soft earnings and a muted outlook.  The company posted record revenues of $1.54 billion from growth in cloud, 5G, and automotive sales.

Corporate earnings for Friday include Cracker Barrel (CBRL) and Genesco (GCO).

Volatility remains moderate but could tick up if reaction to the jobs data is strong.

No Whale bias as large traders showed little interest before the jobs data.


 Posted by at 7:40 am

12/01/2022 ES Trade Plan Worksheet

 Pre-market Commentary  Comments Off on 12/01/2022 ES Trade Plan Worksheet
Dec 012022

Wednesday’s rally sent the S&P 500 to a positive 5.4% up for November after Fed Chair Powell hinted the Fed would slow the pace of rate hikes at the next meeting.  Powell also said that he still thinks the Fed can manufacture a soft landing for the economy, reducing inflation while avoiding a recession.  The S&P 500 closed above its 200-day moving average for the first time since early April 2022.

The US dollar wrapped up its weakest month since 2010.  Since the Fed started raising rates, foreign investors have poured into US Treasuries which bid the US dollar to a peak in September.  The October and November rallies in equities has the US dollar easing back from its recent high.  The US dollar is also at it’s 200-day moving average, but as support.  If the dollar bounces, the S&P 500 will face headwinds.

Costco Wholesale (COST) is down 3% premarket after posting weaker than expected earnings.  Sales through Nov 27 were up 5.7% over last year, but slower than 7.7% for October and 10.1% for September.

Five Below (FIVE) is up nearly 9% premarket after beating expectations and showing a sales acceleration.  The company is benefiting from a US consumer shift to lower priced items and value.

Corporate earnings include Ambarella (AMBA), American Outdoor Brands (AOUT), Big Lots (BIG), ChargePoint (CHPT), Designer Brands (DBI), Dollar General (DG), G-III Apparel (GIII), Kroger (KR), Li Auto (LI), Manchester United (MANU), Marvell Technology (MRVL), Patterson Companies (PDCO), Toronto-Dominion Bank (TD), Ulta Beauty (ULTA), Veeva Systems (VEEV), Weber (WEBR), Zscaler (ZS).

The economic calendar remains full.  The main shows are PCE and Claims @ 8:30am ET and ISM Manufacturing PMI @ 10:00am ET.  Other data includes Personal Income and Personal Savings @ 8:30am ET, Final Manufacturing PMI @ 9:45am ET, and Construction Spending @ 10:00am ET.  The Fed’s Bowman speaks @ 9:30am ET and Bar speaks @ 3:00pm ET.

Volatility expanded in yesterday’s runup but should contract today.

Whale bias is bearish into the 8:30am ET numbers on strong overnight volume.


 Posted by at 6:54 am