Finding the Most Favorable Trading Days Using Non-Correlated Markets

Dedicating two years to a formal grad-school-level trading education is a big commitment. Not everyone is willing to “invest” that kind of time and energy into becoming a successful trader. But our Corey Rosenbloom for this article was so dedicated to making himself a success that he did just that and became a Chartered Market Technician (CMT).

Learning and forcing himself to memorize candlestick chart patterns and the workings of hundreds of indicators prepared him to decide for himself which ones worked best in his own trading style. Here we talk to Corey Rosenbloom about the specific moving averages he uses and why he relies so heavily on something called the 3/10 Oscillator. We also talk about how his major focus on “confluence across multiple non-correlated events” leads him to profits regularly. It sounds complicated, but read on and you’ll realize how truly simple his strategies are.

Tim Bourquin: Corey, how do you describe yourself as a trader? Are you a day trader, swing trader, etc.?

Corey Rosenbloom: I have done a little of each type of trading over the years. Currently most of my trades and strategies are going to be on the intra-day futures market. I’m trading the Dow E-mini and S&P E-mini contracts. 90% of my trades will be strict day trades (out before the close) and 10% may be swing trades in exchange traded funds (ETFs) of various sectors and markets.

Tim Bourquin: What kind of things are you looking for in the charts to find good trading opportunities?

Corey Rosenbloom: For me, it comes down to one thing, “Where is there confluence?” I’m looking for confluence across multiple non-correlated markets. In other words, I’m looking for trends across multiple sectors and markets that typically don’t trade together. Using candlestick charts, for example, along with moving averages, and momentum indicators such as RSI, I’m able to find places in the markets where a variety of signals come together and point in a single direction. I also look at market internals such as the Tick, the TRIN, the VIX, and how those come together at key turning points.

I’m looking for days when the markets are trending throughout the day, going in one direction for multiple bars and then retracing for multiple bars. If the markets are choppy and aren’t giving any clear signals on multiple indicators (signaling confluence) I won’t trade at all. I also like to trade on days where the markets open with a large gap because those gaps, as most traders know, tend to fill at least 50% of gap move during the day. Waiting for those days to occur takes patience and discipline, so I’ve learned to be “Ok” not trading as much as I am trading. If you’ve got a nicely trending day, with multiple indicators looking positive (or negative) that’s when I’m in there trading heavily. Essentially, I’m looking for those days when the market is in “payout mode” and my entire month can be made in just a few trading days when I’m willing to wait for them.

Tim Bourquin: Break that down for us and talk about if those two or three things that you want to see come together to give you a signal. You talked about tick, the trend, VIX – if you saw an “ideal trade,” which three of those would you like to see lining up to let you know it’s time to trade?

Corey Rosenbloom: My ideal trade would be one where it is at the top of an “Elliott Wave impulse.” We’d have a five-wave structure making a new high on a momentum divergence, on a tick divergence and maybe into some kind of resistance area that forms a reversal candle. That’s four things right there that are indicators that are non-correlated, meaning they have nothing to do with each other in how they are calculated. With each of those things independently telling me the market may be headed lower, I’d be looking for a way to sell the market. I’m always looking for combinations of things like that to see where the market is going to go. Those times don’t come along that frequently so, again, patience is critical. But most importantly, I’m going to be monitoring price itself. Is the tick confirming what I’m seeing? In other words, are new price highs being made with new tick highs? Overall, I want to see big pictures of strength or weakness leading into simple trend lines of support or resistance. When price goes to the top of the range and I think we’re finishing out the level, I’m looking for bearish candlesticks as well. All of these things come together to let me know when the time is right to buy or sell.

Tim Bourquin: Traders talk about “buying the pullback,” but how do you know that it’s just a temporary pullback on an intra-day trend or if it’s actually the end of the move and you’ve missed it?

Corey Rosenbloom: Probability. The more indicators that show it’s a pullback that will reverse and continue a trend, the higher-probability the trade becomes. For example, perhaps you see a “bull flag” in the candles and perhaps the pullback comes into a key support level. Even better would be a strong Fibonacci level combined and with a touch of a short-term moving average acting as support. Even better than that, perhaps you have it touching that support with a bullish candle (a large green candle with a tall body indicating the period began at the lower price and ended at the top price). That type of setup also gives me a beautiful place for a stop because I know if it breaks such a strong level that has multiple “confluences”, its most likely headed lower for a while.

Tim Bourquin: Speaking of stops, many traders use Fibonacci levels and simple trend lines to define where they place their stop losses. Yet they routinely get stopped out only to find the position reverses. Is that a concern for you?

Corey Rosenbloom: Yes. What I’m looking to do is place my stop beyond those common levels where lots of traders have put their stops. Everyone is watching the same charts and often times everyone is putting their stops at the same place. I’m looking to see where people are putting their stops and putting my stop beyond that so that I can remain in the trade long enough to be right and profitable. Allowing for wider stops, I have found this allows me to be more accurate with my trading methodology; however I’m always aware of what my drawdown may be. If I need to, I’ll reduce my position size so that my risk is minimized when I have to set a wider stop loss in order to avoid getting stopped out by wiggles. But, if the position does get to those stop levels, I’m okay getting stopped out – it means my assumptions were incorrect and I need to be out.

Tim Bourquin: Tell us more about how you calculate your trade size?

Corey Rosenbloom: I’ve used an Excel spreadsheet calculator in the past to help me calculate my risk. But as I’ve become more experienced, I’ve categorized my trading opportunities into A, B, or C trades, where A trades are the highest probability trades and C trades are most aggressive trades that have higher risk. I determine the “grade” of the trade prior to entering and then base my trade size depending on the probabilities. The “day structure” too is going to determine how much risk I am going to take. As I mentioned at the beginning, the more “trending” a day is, the more comfortable I am putting on larger size positions. I allow myself to only put on the largest positions on trend days. On a range day, you want to keep the trades smaller because it tends to be choppier and your accuracy rate is going to decrease.

Tim Bourquin: You use something called the 3/10 Oscillator. Can you talk about what that is and how you use it?

Corey Rosenbloom: Sure. That’s the indicator I use more than any other. It’s simply taking a three-period and ten-period simple moving average of MACD. It’s using the standard MACD, and then smoothing that with 16 periods. The way to find it, on any online or desktop charting program, is on a standard MACD, type in 3, 10 and then 16. It is essentially a momentum oscillator. I use it along with price to let me know if a trend still has legs and will continue. A new price high and a new momentum high tells me a stock is not overbought, but that a higher high is yet to come. Trends, of course, once established have greater odds of continuing than reversing themselves to its common sense really.

Tim Bourquin: You decided at some point to become a Chartered Market Technician (CMT) simply because you thought it would help you personally as a trader and not because you wanted to manage money. Why?

Corey Rosenbloom: Becoming a CMT has been immensely helpful in my evolution as a trader. It’s a two-year program with three examinations that are six months apart. It has helped me approach the market and forced me to systematically educate myself on all the various technical tools available to me. By studying everything from the Elliott Wave to candlestick charts, it allowed me figure out which were the best for my own trading style and personality. Instead of just choosing a tool because I heard another trader had success with it, I could determine for myself which I liked best and would work well for me when I started trading real money. For me, it was a structured, systematic way of studying the craft of trading. It was a lot of work, but anything truly valuable always is. I recommend it to anyone willing to put in the time.

Tim Bourquin is co-Founder of, a website where he discusses trading strategies and methods with all types of successful active traders.