This strategy is long both the S&Ps and the Dow
Stock index futures opened Tuesday’s session with some
profit-taking after Monday’s surge and TXN gave some disappointing
guidance. After a choppy, narrow range for the first 30-minutes, the futures
found enough love to close their gaps ahead of the 10:00 Consumer Confidence
number. The number came in a bit light and attracted some initial selling, but
the session lows held and forced the shorts to run for cover. Another round of
selling sparked by a pop in crude oil found some minor support at the daily
Pivot, but that gave way to a choppy bleed through the lunchtime lull. I think
we just saw a case of enough negativity that bled over from the NASDAQ to fuel
some profit-taking for the day. Breadth only hung its head in positive
territory for a few minutes before falling hard most of the session.
The December SP 500 futures
closed out Tuesday’s session a loss of -3.50 points, while the YM finished
stronger with a loss of just -4 points. Looking at the daily charts, the
volatility continues as both contracts offered decent intraday ranges, but ended
up posting dojis for the day. On an intraday basis, 13-min head & shoulders
patterns broke during the session, but price managed to run back up through the
broken necklines before the close. For you daily 3-Line Break followers, the ES
remains long with a Break Price of 1178.50, while the YM remains long with a
Break Price of 10216.
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The only report on
the slate for Wednesday is the weekly energy inventories numbers from the API
and the Energy Department at 10:30 ET. Another thing to keep an eye on is the
yield on the 10-yr Note, which has crept back up into the 4.5% range, and could
attract some rotation into fixed income.
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Market Rhythm
Having a “rhythm” with the
market or a trade closes your circle from understanding the rules of the trade,
to actually having the sense of when to enter and when to exit. I’d much rather
see a trade lose little bits over time, gaining market experience along the way,
so that when they reach the plateau where the losing begins to turn to the
uptrend, they know WHY they are succeeding. One or two losses and you’re out
doesn’t allow you to learn the business.
The principles that I use are
not proprietary. I didn’t develop them, and the only alterations I’ve done is
to fit my risk tolerance. It may seem like I “found” something but I can
guarantee I wasn’t the first in market history to find it. It boils down to
watching and reacting, nothing more. With regards to reacting, or responding,
I’ve learned that not all setups are taken, and not all action is tradable.Â
Eventually , you get that rhythm, that “feel”, in which you know which setups
cause a response, and which ones don’t. If you’re at this point, continue to
develop it. If you’re still in the learning phase of the concepts, don’t push
yourself because you’ll get there eventually. Learning to trade is a process,
not an event.              Â
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Please feel free to email me with any questions
you might have, and have a great trading week!
Chris Curran
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