This Is The Type Of Market That Normally Follows A Day Like Yesterday
From Tuesday morning’s closing
commentary: “Market action has been rolling = coiling sideways for awhile
now, and breakout or breakdown seems imminent. Unless they save the trend party
for post-Labor day return of prime time season, be prepared for a stair step
trend day higher or lower real soon.”
We saw exactly that prediction play out in
Tuesday’s session. Price action opened near or right at sell signals in emini
symbols before dropping methodically and predictably from there. It was the type
of “money day” that intraday players have potential to really pad their accounts
with.
ES (+$50 per index point)
S&P 500 gave a sell signal confirmed right at
daily pivot resistance near 1234. Once it broke the neutral zone and closed
below 1231, the next short trade signal came in near 1230. Take your pick…
either of them were money.
A couple of late afternoon lifts into
resistance near 1228 were also valid sell signals to end the day. Taken as one
trade or in pieces, the ES offered an easy 10+ points profit yesterday.
NQ (+$20 per index point)
Nasdaq 100 confirmed its sell signal near 1597,
eventually trading nearly +20pts lower from there. Still the stodgiest (most
stodgy?) emini index of them all, even this day was mildly profitable. Doesn’t
hold a candle to the profit potential = intraday range of Russell 2000 / S&P 400
midcap, so I myself wouldn’t dream of trading NQ right now. For those who do, it
offered decent gains intraday.
YM (+$5 per index point)
Dow Industrial futures were also on a sell
signal below pivot resistance near 10630 as the cash market bells rang. Next
sell signal arrived near 10580, and lows of the day near 10520 made all of those
short entries profitable.
ER (+$100 per index point)
Russell 2000 futures opened right at high
resistance for aggressive sell signals, magnetized right to low support inside
the same opening candle and confirmed sell signals near 661. Late-day lift into
660 resistance was the third sell signal intraday. Any or all of them worked for
at least +$400 per contract… potential for a +$1,000 per emini contract day if
played perfectly. If not, it was profitable regardless.
{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}
Professional
Confidence
I get a healthy flow of email from readers, and appreciate it all.
Please forgive me if some of the recent questions go unanswered until Sunday /
Monday… I’m woefully behind last minute tasks for the mini-vacation that
begins tonight.
That said, one of the recurring themes is how
our analysis in here makes trading look so easy. The truth is that trading is
exactly this simple… but simple does not mean easy. The human
decision = emotion element while markets are moving and money is at risk does
skew everything, and that includes 100% mechanical or rules-based systems as
well. When money at risk and the unknown are combined, human emotions affect and
impact everything.
Brett Steenbarger’s website = blog is an
excellent resource for traders wondering why all the super-duper indicators and
endless hours of research have not resulted in massive wealth from live trading.
Trust me, many of the answers to those questions are found in his forum. I have
it hot-linked to my own website for good reason: no individual trader will
create sustained success without knowing the inner secrets held inside each of
us.
There comes a time in every successful trader’s
career where methods = systems = tools used offer solid, methodical profits over
time if applied correctly in live market action. The methods that I use offer
decent profits in sideways swing sessions and significant profits in directional
session like Tuesday. Small range, choppy sessions don’t offer profit potential
for any method, period.
My mindset each day is to expect favorable
conditions for trading success. I take the signals given, shrug off the losses
and (im)patiently wait for the next opportunity to win. Profitable trades are
allowed to work towards +$400 to +$500 per contract gains, and sometimes those
targets are reached. Many times I settle for less on a trailed stop, many times
I’m stopped out at entry for par after a trade goes nearly (but not quite) +$200
in favor.
Glass Half Full
My own individual confidence in trading comes from KNOWING that a number of
sessions, roughly ten of the twenty each month will offer big intraday swings
for solid profit potential. The remaining ten or so sessions each month will be
sideways consolidation of some sort. Roughly half the time is very tradable,
roughly half is un-tradable. It is just that simple and straightforward.
I let the un-tradable days sort themselves out
for me. If I lose three trades at max loss stops, the session is finished for
me. Shut down the computers, walk away and forget about what happens next.
Absolutely no sitting there in front of the screens stewing over woulda –
shoulda – coulda. That day becomes insignificant to future performance and
results.
Days like yesterday where trade signals are
taken and trades allowed to work offer a week’s wages between the bells. Even if
we miss half the entries, stop one trade too soon, etc it is still a very
profitable event. Knowing that the sequence of tradable = un-tradable session
behavior exists and trusting it will hold true is the essence of my success. I
don’t let myself get euphoric after big days or depressed after tough days,
period. Keeping the emotional highs in check will likewise smooth out the lows.
What Wednesday holds for potential is unknown.
Following a directional, normal range session like Tuesday could be continuation
or consolidation. I’m not trading again until next Monday as there are too many
distractions around me today. Monday 8/22 will be my next post in this forum.
I’ll be away from all computer access until Sunday, but I do know one thing for
sure: half of the sessions will be tradable, half of them will not be when
averaged over time. Part of me will miss the next three days, part of me
relishes the break. The trader part of me was appeased yesterday, now it’s time
to step away and play for awhile as well!
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.