If you’re looking for fireworks today, watch these levels
It’s been a rather dull week so far…
profitable, but dull. No large range days or big moves overall, just a gradual
dribbling lower in the tapes. We are not likely to see fireworks on the last day
of option expiry ahead of next week’s FOMC meeting, but anything is possible
when it comes to financial market behavior.
ES (+$50 per index point)
S&P 500 traded into 1237 sell triggers
yesterday, then chopped its way slightly lower before going sideways into the
close. Another small-range day and morning move, afternoon consolidation.
1237 should again offer pivotal resistance =
support today. Short below and long above 1237 is the general bias, with 1241
last line in sand for sellers.
MD (+$100 per index point)
S&P 400 also posted a very muted session. Quick
stab lower in the morning led to sideways fuzz in the afternoon. Look for high
718s to be layered resistance again today, and break above potentially bullish
from there.
YM (+$5 per index point)
Dow Industrial futures hit their sell signal
near 10620 and worked downward to 10560 by midday. Miniscule intraday range by
any account… perhaps we’ll see better today but more likely next week.
ER (+$100 per index point)
Russell 2000 futures dropped and coiled along
with other emini symbols Thursday. a revisit to yesterday highs will probably
cap the upside today, otherwise we could see sideways to higher action above
there.
{Price levels posted in charts above are
compiled from a number of different measurements. Over the course of time we
will see these varying levels magnetize = repel price action consistently}
Summation
Today is equity option expiry. Possible to have a big day, but not
probable. Next week is the much awaited FOMC meeting where a growing number of
traders feel rate hikes will pause or end. Regardless of the outcome,
expectations may keep stock markets sideways to higher until then. Could be a
landslide sell-off if stocks are propped with expectation of no further rate
hikes, and the Fed keeps raising right along. Should be an interesting event
across all financial markets, to say the least.
Pleasure & Pain
Living things exist and survive by the dual acts of seeking pleasure while
avoiding pain. Accomplish those simple tasks and procreation exceeds attrition.
Simple as that.
New traders are in full pleasure seeking mode
when first getting started in the game. Plans for quick profits, massive wealth,
a fun-filled trip to all material things in life are sugarplums dancing in our
heads. We are warned about the dangers and pitfalls of trading, but who has time
for that? We’re way too busy reveling in our pleasure mode to even consider
dealing with potential pain.
Let a few of those trade decisions turn to
financial losses and the entire emotional outlook shifts 180 degrees. We go from
pure pleasure mode of fantasizing about all good things to the pain of fearing
all bad things instead. It is not a dramatic shift… usually a subtle evolution
that sneaks up on us in direct parallel to our account’s equity curve ride.
Part of avoiding pain is to distance oneself from
disappointment. Once we have experienced some challenges in any pursuit, natural
defense mechanisms kick in. We are taught from an early age to “keep it real”
and “don’t get our hopes up” while “not counting your chickens before the eggs
hatch.”
“Seeing is believing” would be the
biggest false cliche` I can think of. “Believing is seeing” would be the natural
order of progression. When traders begin to make excuses on why they cannot
succeed, their planned failure becomes reality. When traders visualize and
expect trades to lose, guess what happens? They do!
Fear is nothing more than inverted faith: it is
expectation of evil rather than good. We can far easier train ourselves to be
losers than winners although the overall process is equal.
You Are What You Think
Positive thoughts, realistic expectations and setting solid goals to succeed
are the foundation of any successful venture in life. Shortcuts, false
expectations and flying by the seat of one’s proverbial pants is the path most
humans take thru any venture in life. The former is mandatory for methodical,
sustained success. The latter is justified with negative thoughts, excuses and
outright lies to oneself.
If one single person can succeed as a trader,
ANY person can therefore do the same or better. That is a universal law, not
merely my opinion. Yes there are valid reasons why each of us meet up with
challenges or outright failures along the way. Whether we cease trying to
succeed and turn our attention elsewhere or remain focused and accomplish our
goals in the end BEGINS by how we speak out loud within the confines of our own
mind.
Profitable trading requires three basic
things:
1. Method or system with favorable outcome expectancy (greater profits than
loss)
2. Sufficient capital to survive inevitable troughs in equity performance (drawdowns)
3. Sufficient emotional control to operate method or system profitably
Of the three pillars to success, first two
factors are simple enough. There are literally hundreds if not thousands of
systems and methods that offer profit potential when operated correctly. Enough
money to work with either exists or it doesn’t, no two ways around that.
Sufficient emotional control to learn a method
intimately or operate a mechanical system thru deep drawdowns and strings of
consecutive losses is the line in sand between success or otherwise for traders.
Deep down we all know that our future trading performance depends squarely upon
our own decisions. For some, that is a frightening reality. We must decide what
methods or systems to trade, what markets, when to buy or sell, when to let a
100% mechanical system keep hitting new historical loss levels, etc.
There is no magic secret, no Holy Grail, no way
to avoid the painful reality of self-reliance and performance in the markets.
Thousands of traders spend millions of dollars each year chasing such false hope
and siren’s song. This endless equation will never change… every new claim
that hypes the ability to bypass any form of pain (learning curve, making
mistakes, string of losing trades, etc) will attract throngs of willing buyers.
Offers to teach traders how to succeed thru time, effort, patience and diligence
sell much slower and fewer copies than the false hype & hope. I can personally
assure you of that.
Next week we will cover in some detail the
thoughts and actions necessary to succeed as profitable traders. See you in the
weekend educational post before then!
Trade To Win
Austin P
(free pivot point calculator, much more inside)
Austin Passamonte is a full-time
professional trader who specializes in E-mini stock index futures, equity
options and commodity markets.
Mr. Passamonte’s trading approach uses proprietary chart patterns found on an
intraday basis. Austin trades privately in the Finger Lakes region of New York.