E Mini S & P at the moment of truth
Since so many people are obsessed with the ES I have been trying to cover this market a lot lately. Please do not get me wrong it is probably the single most important market there is because every other market has been keying off it for the last 3 years. However, it is a notoriously difficult market to trade because of all the one lot traders with $1000 account balances who are so jumpy they trade a 75 tick chart and freak out when they take a .25 ( $12.50 ) hit. This makes this market so choppy intra day.
We had our breakout from the flat consolidation pattern I outlined and now we have immediately retraced which is not good. I mentioned that it could be a trap if we immediately retraced which we have. For the pattern to be completed the low of the breakout bar needs to get taken out. This is why I have marked that low with an arrow. If we break that low I think the market can be traded from the short side again.
We do have conflicting information in the accumulation indicators. The POIV is indicating strength and the Pro Go Indicator is diverging quite a bit. I think both of these can be used but like so many things it is a judgement call. Tomorrow is a very important day as a result of all of this. Some of my other short term proprietary tools are weakening quite a bit which are supporting a decline. However, they are also at a critical juncture and could turn up if we explode out of here. They still favor down going into Friday net.
We completed a nice trade tonight in the Swing Service that I want to show.
A couple of comments to make about this. First I don't make assumptions about where markets are going when I determine what trades I make. This helps me immensely. Everyone gets so tied up in the gloom and doom talk they assume bonds must go up since stocks have to go down. Nothing has to do anything!
I was reading some articles at Zero Hedge tonight and it is just amazing how every one comes up with a reason as to why any rally is BS and attributable to something unusual. The suggestion is always that price always should or is about to go down. I believe bigger picture we are heading down but I think these really popular sites that people go to are often so negative they can really skew your views on things. I know some of you like to read a lot of things on the web and that is how you found this site. I just urge caution in reading some of these always negative stories. We do have problems there is no question about it. However, that does not mean price has to go down every day and any rally is a short squeeze. Even in big down trends there are powerful rallies we can trade, so don't get too fixed on a view either way, it will hurt your trading.
After I set aside what "had to happen" I noticed significant weakness in the Pro Go indicator prior to this recent drop so I knew there was trouble brewing here before this happened. There was much more to the logic of this trade than this, I am just pointing this out as one warning sign that meant a lot more than some idle speculation about what should happen in the next week.
Second, we were trying for a target today and got within 3 ticks of it and then bounced. When this happens after 3 good days at times I just take the money. This is not a set rule it is a judgement call just like so many other decisions are in this business. There is something about establishing an exit point for me which is generally where I deem some support might be waiting for me. As a result when I get close and don't get my number, I check my ego at the door and get out. This was a pretty good trade and I was content with taking this amount out of the market.
Let's go into tomorrow not assuming anything. I have more supporting the trap than I do supporting the breakout to the upside. However, one PPT buy program and that could all change.
Have a great weekend