Where I See Intraday Opportunities On The Long And Short Sides

As mentioned in

yesterday’s column, using the combination of hourly support and divergences
to the north served us well throughout Thursday’s trade. Given current heights,
which provide for extremely nervous intraday traders, there have been strong
intraday opportunities on both the long and short
sides. Here’s what I mean.

First, as noted below our standard charts, we have an uptrending hourly channel
that has been in place since April — and which correlates nicely with the
supporting moving average. Not a bad “TUBAT” (Trust Until Broken and Tested)
indicator to guide hourly trades with lesser timeframe triggers over the past
two months. Will it break at some point? Duhhh … and it will likely provide one
heckuva short trigger with a stop on a turn back to the north and trade premise
violation.

Second, in terms of my comments on intraday shorts (anticipating a few emails on
this one), as is typically the case in any “stretched” market with periodic
weakening price vs. momentum or TICK divergences, traders trading the larger
trend are quick to trigger trails on breaks in the lesser timeframes. Add a few
fresh and knowledgeable shorts (not the ones caught in the longer-term squeeze),
and you have the result of extremely quick retracements that are often as strong
or stronger intraday plays than longs.

What I mean — as most seasoned scalpers know — is that shorts can often pay
better than longs — even in a longer-term uptrending market (assuming it’s
stretched via distance from support and divergences) whose support holds —
simply because of the “time in market” perspective. For fear is arguably
stronger than greed at times, and since much of the trading population trades
from the long side, reaction from those fearful longs — even if just momentary
and against the larger trend — can provide for outstanding shorts, exiting
on approaches into the longer term supports. You can easily look back to
recent trend breaks over the past few months, or in any “bull” market for that
matter to find some solid examples, including this morning’s 10:25 A.M. ET
one-minute break that brought ES down four points toward 13-minute support.

Now I’m not recommending folks become “contra-trend’ traders. Yet frankly, such
trades aren’t counter trend at all. As I mentioned in

Wednesday’s column (thanks for the feedback by the way), one can be one
heckuva bear on a lesser timeframe and a bull on the larger. For both traders
are indeed trend traders — the short on a one or thee-minute basis taking a
high-probability, low-risk short-term profit on numerous occasions that add up
over time — and the long that may be playing the exact same sequence, yet in
reverse as the short’s exits become the long’s entries and vice versa. (Keep in
mind many scalpers refer to a 30-minute hold as an investment.)