What 90% Of This Business Is…

As has often been the case so long as the hourly trend has remained down, longs
have been scalp trades only while shorts continue to take advantage of the
hourly tailwind. Volume and liquidity remain one stop above “awful” on this
Holiday-shortened week which basically leaves the market for the most nimble of
traders.  As we head to press, both markets are bouncing off their earlier
lows and ES is forming a potentially bullish cup on the 13-minute charts which
is worth monitoring into the afternoon.

With respect to this morning’s early trade, the bearish inverse cup forming at
approximately 10:15 AM ET provided enough of a coil for both markets to break
out of Thursday’s 13-minute ping-pong range, even on day three of a decline from
recent highs and with hourly charts reflecting oversold conditions. Yet trend
continues to overrule momentum with momentum indicators providing strong exit
guidance to remove the “greed” factor.

The morning setup occurred on the third price probe below key three-minute
supports (or the first 5MA reversal cross) with the 13-minute and hourly
tailwinds intact, which merely reinforces recent discussions and

course guidance for those taking earlier probing entries to consider those
key subsequent entries after most others simply fold tent out of frustration. As
I’ve said before, I’ll go to my grave believing this business is 90%
psychological.

The morning trade also reinforced the need for mental flexibility for short-term
scalpers, as evidenced by my own broker-documented log below. As always, it’s
intended for instructional purposes only and is by no means is a “look at what
Don did” exercise. Yet your feedback has indicated a desire for more of these
and I’ll try to post from time to time — including
miscues and stops which for some odd reason don’t seem to exist in
most industry trading columns, either because they don’t trade or want to make
this business appear a heckuva lot cleaner than it really is and make it appear
that anyone can do it when facts show that most fail. Enough said as I already
sense the “there he goes again” reaction. 

With respect to the upcoming

virtual seminar, we’re very close to selling out but still have a couple of
seats left. I’m in the process of putting the finishing touches on a live
desktop sharing application that will provide us with an extremely useful tool
throughout the week, and look forward to working with those that have signed up.