Here’s Why I’m Using 5-Minute Charts Now
Gap, Grind, Crap & Grind Again
That pretty much explained yesterday’s price
action. If you had your ducks line up on the opening it was a fairly easy
trade. In my case, I was watching Lockheed Martin
(
LMT |
Quote |
Chart |
News |
PowerRating). My long entry price was 48.12 with a 48.20 limit. Unfortunately, I did
not give it enough room for a fill, the next print after 48.12 was 48.25, it
never looked back. There is not much you can do, it happens. Nonetheless, it
was a bit disconcerting.
As I have been mentioning recently, we are in
summer trading mode, and I am becoming more reliant on set-ups off the 5-minute
chart, versus the 1-minute chart as a result. The LMT
trade was something that was spotted in advance of the market opening. The
chart below outlines my thoughts for a long trade.
While the trade immediately went in our favor, it
did begin to stall in the mid-48 level. At this point, you could have either
scaled out of half, or blew the whole thing out. I always cut half when the
price action stalls. However, just like HVT,
the S&Ps are my ultimate guide. In this case the S&Ps never really pulled
back intra-day, as a result you had a trade that kicked in later on. Either
way, a good trade.
The same thing was true going into the afternoon
session. HVT was obviously not the best
strategy given the grinding nature, but there were still some nice technical
set-ups on 5-minute charts. When you see a 1-minute S&P chart that looks like
this, either turn off the monitors or push the time frame out.
Luckily, if you switched your focus to a 5-minute
chart, you would have come across set-ups in Goldman
Sachs (GS) and Boston Scientific
(BSX). So while the afternoon was slow, it was by no means a wash. Waiting
patiently for those trades to come together as we did in the
Trading Room paid off for us.
Looking ahead to today’s action, I could not help
but notice the weekly chart of the S&P futures last night. While I certainly
have no intention of getting in front of the freight train, this chart gives me
a heads up to some potential “decision points” as we head into the 1022 area.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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Mark your calendars! Next Tuesday, June
24, I will be interviewing someone who plays an integral part in my day-to-day
trading, Ben Lichtenstein. Ben calls the action each day from the S&P 500 pit
on the CME. I can tell you this, I feel
lost when I do not have him on while trading. Join Ben and me as we talk
about the current state of the markets and how you can gain that spilt-second
edge with audio commentary from the S&P Pit. Sign up
information will follow in the next day or so.
As always, feel free to send me your comments and
questions.