Mental Overhaul Follow-Up

December 5, 2003
Chris Curran

The
December SP futures opened Thursday’s session with virtually no gap,
after seeing earlier pressure in the pre-market from a higher-than-expected
Jobless Claims number. The action starting out was almost an earlier repeat of
Wednesday, with sideways consolidations followed by sharp pops to the upside.
The contract again ran out of buyers in the 1,070 area before a sideways drift
along the Daily Pivot gave way to selling pressure. But the similarity ended
there as the futures staged an impressive stand and posted a double-bottom off
of the 1,063 level, just under Wednesday’s low. The combination of shorts
covering and buyers getting positioned ahead of the slew of news tonight and
tomorrow morning was good enough for new session highs.

The December SP 500 futures
closed Thursday’s session with a gain of +4.50 points, and finished in the upper
1/2 of its daily range. Volume was estimated at 574,000 contracts, which was
right at the daily average. On a daily basis, the ES posted a market structure
low and has formed a small cup and handle with gap support still in the 1,060
area and then the 10-day MA at 1,058. On an intraday basis, the inverted cups
and handles were able to retrace into resistance and break before the late
rebound, and, as I wrote this, price was sitting just below 60-min and 30-min
support (now resistance) at 1,068 and 1,067, and on 13-min support at 1,066.
So, aside from any surprises, we’ll be looking at an opening gap to the
downside.

In terms of news tonight and
tomorrow, INTC narrowed their revenue guidance, but didn’t offer any new upside,
which was expected. The futures were feeling some pressure from the news. They
also announced they’d be increasing FY ’03 R&D spending and would be taking a
$600 mil goodwill charge for Q4. Friday morning gives us the highly-anticipated
November Non-Farm Payrolls report at 8:30 ET. The market will be looking for an
increase from October to 150,000. The November Unemployment Rate will also be
released, and is expected to remain steady at 6.0%.

Mental
Overhaul Follow-up

Thanks to everyone who emailed
me regarding last night’s column on giving yourself a mental “overhaul.” When I
said that, as part of my overhaul process, I went back over all the “old
ground,” I meant that I basically went back through everything since I had
started, including trading journals and books that I’d read. I remember going
back and reading “Reminiscences of a Stock Operator” and “Market Wizards” again,
and each time it was like reading entirely new books that I’d never seen
before. I kept saying to myself “How could I have missed that, it’s so obvious
now.” But the reason I had that flood of “clarity” is because of all the
“slogging” I had done. I had to lay the groundwork and then go back over it
again before I got anywhere. I had to build a base of knowledge to connect
later, and I basically had to break myself, before I could break out. Don’t get
me wrong, even today, I still experience periodic brain flatulence with the
clear path seen afterward with the obvious benefit of hindsight. Anyone who
tells you they don’t make mistakes is a liar, but the key is keeping the
mistakes small enough to keep you in the game. I have a great list of books
that I’ve read that not only shed the light on market psychology, but some of
them really shed the light on a personal level of what’s going on inside us. If
you’d like the list, just email me and I’ll be happy to send it to you.