This Is Your Edge. Do You Have It?

The
March SP 500 futures opened Wednesday’s session
with a small downside
gap, despite a slightly stronger U.S. dollar and a broker upgrade of bellwether
Intel. After quickly filling the gap, locals were able to start a selling spree
that was joined by some of the bigger brokers. The selling was pretty orderly,
with the programs not really a factor. However, after consolidating just above
the low, the contract snapped back up harder than it fell, and into positive
territory. Despite another attempt to bleed back down, the buyers again stepped
up to the plate going into the final hour to push the contract to a new session
high. The resulting tug-of-war throughout the session was exactly the type of
“backing and filling” that the contract needs to work off its “overboughtness.”

The March SP 500 futures closed
Wednesday’s session with a gain of +3.50 points, and finished in the top 1/2 of
its daily range. Volume in the ES was estimated at a heavy 623,000 contracts,
which was ahead of Tuesday’s pace and well above the daily average. Looking at
the daily chart, the contract held its lower trend line support and continues to
climb its trading channel to a new contract high. Open interest increased a bit
during Tuesday’s session, but the new money may be waning for the time being as
the contract defies gravity. On an intraday basis, the contract again broke
triangles on the 60-min, 30-min, and 13-min charts, leaving support in the
1,123.50-22.50 area.


Thursday morning gives us the
Weekly Jobless Claims number at 8:30 am ET and its consensus for a slight
increase to 345,000. That’s followed at 10:00 by November Wholesale Inventories
and its estimate to remain steady at 5.9%. After 3 days up and a weak closing
premium, I’ll be looking for a retracement on any gap up from the employment
news. However, be on your toes on the short side due to the likelihood that
there are still shorts trapped from the sharp move off of the 1,117 area.

Do You Have an Edge?

Every trader who has lasted in
this business has developed their own unique methodology that has, at its core,
an “edge.” What is your edge that will give you an advantage over the countless
thousands of other traders? Contrary to what many believe, your edge is much
more than some magical trade set-up or system. Your edge is being able to
control the mental twists of this business that seem to hold so many back. Your
edge is in KNOWING YOURSELF. Knowing yourself well enough to avoid the types of
market conditions or times of day that can get you into trouble. Knowing what
works and what doesn’t work for YOU. Your edge is in your ability to quickly
admit you’re wrong and apply proper risk management. Most importantly, you must
believe that you have an edge to provide personal motivation.

Daily Pivots for 1-8-04

Symbol Pivot R1 R2 R3 S1 S2 S3
COMP 2067.60 2088.17 2098.67 2119.24 2057.10 2036.53 2026.03
INDU 10511.59 10556.90 10584.76 10630.07 10483.73 10438.42 10410.56
NDX 1506.64 1522.07 1529.89 1545.32 1498.82 1483.39 1475.57
SPX 1123.04 1129.62 1132.92 1139.50 1119.74 1113.16 1109.86
ESH 1122.33 1129.92 1134.33 1141.92 1117.92 1110.33 1105.92
SPH 1122.37 1129.73 1133.87 1141.23 1118.23 1110.87 1106.73
NQH 1509.17 1525.33 1533.67 1549.83 1500.83 1484.67 1476.33
YMH 10492.00 10542.00 10570.00 10620.00 10464.00 10414.00 10386.00
BKX 975.74 979.30 981.07 984.63 973.97 970.41 968.64
SOX 525.33 529.81 532.50 536.98 522.64 518.16 515.47
QQQ 37.48 37.88 38.09 38.49 37.27 36.87 36.66
SPY 112.63 113.36 113.80 114.53 112.19 111.46 111.02
SMH 43.44 43.92 44.19 44.67 43.17 42.69 42.42

Please feel free to email me with any questions
you might have, and have a great trading day tomorrow!

Chris
Curran