Learn The Type Of Day That Fits Your Style Best
The December S&P 500 and Dow futures opened
Wednesday’s session with small gaps to the upside after another tight overnight
range and a light news load. After quickly filling the gap, Merrill Lynch got
things off to a quick start, buying enough contracts to push the futures through
Tuesday’s session high and R1 in the 1,047.74-48.25 area and force locals to
cover their shorts. The session gave us the range expansion we were looking for
and showed some healthy action as the contract made new highs, consolidated its
gains for 90 minutes or so, and then lifted off again.
The December S&P 500 futures closed Wednesday’s
session with a gain of +11.25 points, and finished in the upper 1/2 of the daily
range. The December Dow futures closed the session with a +121 point gain, and
also finished in the upper 1/2 of its range. Volume in the ES and YM was
estimated at 645,000 and 52,000 contracts respectively, which was ahead of
Tuesday’s pace and above the daily average. On a daily basis, the ES posted a
market structure low off of the 38% Fib retracement of the 10/24-11/7 move, and
was able to close back above its 10-day MA. The contract was able to temper
some of the bearishness, but still needs to get through last Friday’s high to
resume the year’s rally. On an intraday basis, the 60-min, 30-min, and 13-min
charts all closed with cups with support from 1,055 down to 1,050 (see chart).
The YM posted a market structure low off of its 50% Fib retracement of the
10/24-11/7 move, and was able to close back above its 20-day and 10-day MAs.
The contract was also able to break long again on the daily 3-Line Break chart.
Resistance also now stands at the yearly high at 9,915.
The economic dry spell continues on Thursday with
the only scheduled report being the September Trade Balance (or Imbalance).
After the trend day, I would expect at least an oscillation range in the
morning. I know, I know, god forbid we have 2 trend days in a row!
Finding Your Type of Day
A big part of trading is finding the right type
of day that fits your style. For me personally, my worst days have always been
the “gap up and hold” days that never look back. Today was the kind of day that
you can throw divergences and oscillators right out the window, and the type of
day that the “top pickers” mostly got it stuck up their you-know-whats. Those
that came in looking for some range expansion and possibly a trend were probably
rewarded nicely. My point is that you should learn the type of day that fits
your style best, and on those days that don’t fit your style, sit on the
sidelines or go do something else. Don’t start shorting or buying just because
a market looks overbought or oversold to you, because, as you can see, a market
can quickly just become MORE overbought or oversold. The biggest and most
difficult part is having the discipline to go with what your eye plainly sees,
and not with what your brain thinks should be happening.
Please feel free to email me with any questions
you might have, and have a great trading day on Thursday!
Chris Curran
chrisc@tradingmarkets.com