Tuesday, November 19, 2013

Pre Market Thoughts Wednesday

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
Day Trading Pre Market Thoughts
Trend Thoughts: Trend and bias for trading is still long despite the pullback. Will  not consider a trend change until a solid close below the low of last Wednesday.

Trading Day of the Month: Day 14

 Reports: 8:30 retail sales, 10am existing home sales and 2PM FOMC minutes

Special Day or Thoughts: Market could move, 3 possible events tomorrow.

Gap Fill Thoughts:   Up Gap: If price is below the 1789 area on the ES and 3389 area on the NQ and considered resistance will consider the short.  Down Gap: If price is above the low of Tueday as support or using the R2 pivot as support S2 will consider the long at the open off 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: If price is above the High and its support will consider a run at the open. If price is above the 1789 area on the ES and 3389 area on the NQ may consider a long if 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 lows of Tuesday 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. 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 fade if sitting at 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.

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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