Monday, November 25, 2013

Pre Market Thoughts Tuesday


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:
  • 1798.5
  • 1792.25
  • 1788.50
  • 1782.50
  • 1777.25
Day Trading Pre Market Thoughts  
Trend Thoughts: Trend continues long with a 4th higher low day. Will be careful with longs up here.  Will  not consider a trend change until a solid close below the low of last Wednesday.

S&P 500 Sectors: Strong Sectors: XLF and XLV    Lagging Sectors: XLU  Notes: XLF and XLV have interesting red spinning tops on their daily charts

Range Thoughts ES: 10-12 unless ES breaches the Monday low than may get an extended range of a 12-15 points

Reports: 8:30 Building permits and 10:00 AM Consumer Confidence

Special Day Thoughts, Trading Day of the Month: Day 18, NR7 for the YM. I suspect a wider range day tomorrow for the 3 indexes. False down day candle formed on the the 3 indexes.


Gap Fill Thoughts:   Up Gap: If price is below the R1 Pivot and considered resistance will consider the short.  Down Gap: If price is above Monday's lows will consider the long at the open if sitting at support. Notes: If sitting at support/resistance check pre-market to see if price is considered support or Resistance. 

Gap and Go Thoughts: Up Gap: Solid up gap over the Highs with support may consider running at the open. Down Gap: may consider a fade off resistance with a gap below  the low (if pre market conditions are favorable) but better to pass and let the first 30 minutes play out.   Notes: none

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: Will consider BO's or pullbacks with a large down gap that has traded bullish off support. If yesterdays highs are resistance will pass 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. 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 extremely bearish for 30 minutes below Mondays low. Extremely bearish is breaking support levels with a long red 30 minute nasty down bar with volume. If that scenario unfolds then I may consider shorting pullbacks on light volume provided the bounce is not coming off support with strong volume. Indexes must be working together Notes: Best not short with the market trend up

Fading Short thoughts: I may consider a fade near yesterdays Highs on a gap down or a gap up that trades into the R2 pivot. Otherwise will not short with the trend up. I want the 3 indexes in agreement. 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.

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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