Wednesday, November 20, 2013

Pre Market Thoughts Thursday

ES and NQ Five Day 30 minute charts
 ES PRE MARKET THOUGHTS
This a sample of how I do my market preparation. The night before I form a hypothesis of how I will approach the day if the market gaps up or down. Preparing the night before takes out all the emotion of possibly considering a trade when the markets open. 

White Lines show the ES Price Level areas I will be paying attention to when considering a trade:
  • 1792.25
  • 1789
  • 1782
  • 1777
  • 1770.5
  • 1762.25
Day Trading Pre Market Thoughts
Trend Thoughts: Trend and bias is still long but more cautious as the NQ has closed below the 10SMA. The ES and YM are still above the 10sma and represent a gradual pullback. Will  not consider a trend change until a solid close below the low of last Wednesday. Will move to neutral with a close below the 10sma. Still have room for a pullback lower and not yet extended/over sold in the short term.

Trading Day of the Month: Day 15

 Reports: 8:30 UE claims, and 10:00 Philly Fed

Special Day or Thoughts: Reports tomorrow could be market movers. Don't chase a gap down after 3 days of lower lows.

Gap Fill Thoughts:   Up Gap: If price is below the PP pivot or the low of 2 days ago on the ES and YM or below the PP on the NQ, and considered resistance, will consider the short.  Down Gap: If price is above yesterdays low I may fade  off the low. A larger gap down I may consider the fade if opening near the R1 or R2 support areas  Notes: If sitting at support/resistance check pre-market to see if price is considered support or Resistance. 

Gap and Go Thoughts: Up Gap: If price is above yesterdays High and its support will consider a run at the open. If price is above the PP pivot may consider a long if  considered support, as there is room to run to the R1 pivot.   Down Gap: Will not chase. I may consider shorting with a gap down under the R1 pivot if I have solid resistance. Will keep an eye on support below and pass if support is in the way of an exit goal. I want the indexes in agreement or will pass.  Notes: Overnight action is key if going with a gap and go down.
Thoughts on Long or Short Setups after the first 30 Minutes of Trading
(Always evaluate market after 30 minutes unless noted)
LONGS
Breakout thoughts for a 15, 30 or 60 minute breakout: May consider a BO or pullbacks with a flat or modest gap up that holds its strength after 15 minutes for a run to the R1 pivot or highs of yesterday. Will consider Bo's or pullbacks with a large down gap that has traded bullish with volume off support. Notes:

Fading Long thoughts: In staying with the trend looking for fades off support (false breakdowns) near the price points stated above. Minimum 30 minute wait, may consider 15 minute long fade if price trading near the low of yesterday. As always don't fade run away trains if bearish early, let the run play out. Always want to go long with the indexes at support and monitoring the components of the indexes to see if they are in agreement. Notes:
SHORTS
 Breakdown thoughts for a 15, 30 or 60 minute breakdown:  Will not consider any breakdowns unless bearish and trading under yesterdays lows after 30 minutes. Indexes must be working together and room to support. Notes: Be careful shorting with a trending market 

Fading Short thoughts: Unless its a very weak bounce, (not coming off support on strong volume) and the 3 indexes are at resistance I will pass on fading shorts. Trend is still up and bounce back day is possibly in the cards. Always want to short with the indexes at resistance and monitoring the components of the indexes to see if they are in agreement. Notes: none 
 
Always mark Support/Resistance and confluence zones that could be used for targets, fading and breakout/breakdowns.

* You don't have to trade everyday. If the conditions don't feel right or if you're unsure of the current days trading environment then PASS on the trade. Missed money is better than lost money.  Day trading and the stock market is not a "war" that you must win at all cost. Trading should be fun, wait for only the good setups. Follow your rules, stick to your stops, and know that everyday the market presents a new chess board.

No comments:

Disclaimer

I DO NOT MAKE RECOMMENDATIONS TO BUY OR SELL SECURITIES - I JUST POST TRADES I MAKE OR FIT THE RULES OF MY TRADING PLAN ON A DAILY BASIS. DO YOUR OWN DUE DILIGENCE - YOU ARE RESPONSIBLE FOR YOUR TRADES, INVESTMENTS, AND DECISIONS! ALL CHARTS COURTESY OF TRADESTATION, SCHWAb & TD AMERITRADE