Are You Trading In An Optimal State Of Mind?

December 16, 2003
Chris Curran

The
March
SP 500 futures opened Monday’s session with a 1% gap,
but well off the overnight Globex highs that were posted on the news of Saddam
Hussein’s capture. The size of the opening gap gave less of a probability of a
gap fill, but the “gap and trap” wasted no time in getting started. Good broker
selling right out of the gate started the pressure, with price stalling as the
TICK climbed higher. The contract consolidated in a 3-point range between the
50% fill area at 1,078 and R1 support at 1,076 After lunch, the contract began
a new leg down to fully fill the gap and repeatedly break bear flags into
negative territory.

The March SP 500 futures closed
Monday’s session with a loss of -5.00points, and finished in the lower 1/2 of
its range. Volume in the ES was estimated at a heavy 821,000 contracts, well
ahead of Friday’s pace and above the daily average. Looking at the daily chart,
the contract opened above the upper end of its trading channel, and posted a
market structure high and bearish engulfing line just above 10-day MA support at
1,067. The contract also broke short on the daily 3-Line Break chart. On an
intraday basis, 60-min down to the 3-min charts are all still pointing down, but
have room to retrace to 13-min and 60-min resistance, and the 38% Fib
retracement of Monday’s range, in the 1,071-73 area.

Tuesday gives us the busiest
day of the week in terms of economic reports. Starting at 8:30 am ET, we have
the November Consumer Price Index, with a consensus for a 0.1% increase.
November Housing Starts and Building Permits will also be released at 8:30, with
expectations for 1.914 mil and 1.901 mil respectively. November Industrial
Production and Capacity Utilization follow at 9:15, and are expected to
increases to 0.5% and 75.4%.

Are You
Trading in an Optimal State of Mind?

Sometimes, what happens during
the trading day comes down to knowing yourself. Are you tired from the night
before? Are prepared before the open? Are you relaxed or distracted? Is
something in your personal life affecting you mentally, or even physically? If
you can’t trade that day, then don’t. And don’t overanalyze the reasons why you
should or shouldn’t trade. Psychoanalyzing something that happened in your 4th
grade art class 30 years ago isn’t going to help your trading today.
Unfortunately, I watched most of today’s action from the sidelines with a heat
pad on my shoulder, after waking up with a pinched nerve in my neck. I thought
I’d experienced pain before, but when I turned my head, I actually saw spots!
Because this was only 1 out of 260 or so trading days for the year, I’d rather
play defense and protect my account than try to trade in a less than optimal
state of mind.