This Is What Trading Is About

June 3, 2003
Don Miller

Both major markets are in chop
mode this morning — as we would expect given yesterday afternoon’s downdraft,
which according to the pundits was the result of either (a) a White House SARS
rumor, (b) early leaking of the IBM accounting shenanigans, (c) a hard break in
an overextended Nasdaq market, or (d) beginning-of-month profit
taking.Â Thankfully, we’ll leave the why’s to the non-traders as we simply
continue to follow the recent strong market guides which had us long biased
until the 13-minute trend broke as we reviewed in

Monday’s column.

Such bias continued this morning and led to the early low-risk trade opportunity
of the day on the 13-minute pullback which yielded 3 ES points or $0.30
SPY.Â Given yesterday’s retracement which brought ES down to 15MA long supports
of both the 60 and 120, I haven’t been looking for much short continuation
beyond the high-percentage early scalp play, and will remain on the sidelines
until something obvious appears.Â The Nasdaq remains a bit weaker as we go to
press, as it has already probed below hourly support.

Lastly, I’ve posted an expanded view of the 13-minute ES chart below our
standard charts to reflect on recent market rhythms.Â While no technical method
is successful all of the time and I will go to my grave knowing that trading is
more about skill and mindset development vs. understanding technicals, recent
market rhythms have produced no fewer than twelve setups documented in the

video and

simulations on just one timeframe over the past six days in the form
of six reversals, five pullbacks, and one cup and handle as highlighted below.Â

Should one be expected to take every one or trade each one taken 100%
effectively?Â Of course not, as it’s simply not practical or realistic.Â For
example, those trading pullbacks may simply trigger trailing stops on the
reversals, and the underlying momentum and larger timeframe indicators are key
components.

Nevertheless, my point is that even if one simply focused on a handful of these
opportunities, the market as of late has been providing outstanding short-term
trading setups, despite what some swing traders have recently referred to as
“unmanageable whipsaws.” Of course, you know what they say about one person’s
trash.Â Anyway, as I’ve said before, when they’re handing out free donuts, grab
one, as we leave the current guessing game of whether we’re in a longer term
bear or bull market — as well as the reasons behind the recent schizophrenic
moves — to the pundits.

ES (S&P)Â Â Â

Â Â Â Â
Tuesday June 3, 2003 11:00 AM ETÂ Â Â Â Â Â Â NQ
(Nasdaq)