Thursday, January 2, 2014

Pre Market Thoughts Friday

ES Five Day 30 minute chart

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 Levels and Trend Lines I will be paying attention to when considering a trade: Does not include overnight highs and lows.

  • 1846.50
  • 1840
  • 1837
  • 1833.75
  • 1829.50
  • 1823.25
  • 1818 
Trend Thoughts:  
  • Short term With the down day the short term is neutral to bearish targeting pullbacks to the long side and shorting in the down channel. Many unfilled gaps on the ES over the past 2 weeks. 
  • Longer Term remains in a bullish up trend
S&P 500 Sectors: 
  • Strong Sectors: XLY, XLB  
  • Lagging Sectors: XLU, XLP 
  • Notes: 
   
Thoughts on the Trading Day and the  Month: 
  • Day: 2nd trading day historically favors longs
  • Month: January ES is historical a positive month and barometer for the year. Every down January since 1950 preceded a new bear market
  • * Information taken from Stock Market Almanac and provided more for fun and not as a day trading bias 

Reports: None

Gap Fill Thoughts: 
  • Up Gap: Will consider 1838 and 1833.50
  • Down Gap: Will consider fading a down gap near 1819.50, 1822/23 with overnight support 
  • Note: Always check pre-market to see if price is considered support or Resistance.

Flat Open:  pass

Gap and Go Thoughts: 

  • Up Gap: Will consider if solidly above 1829.25 and as support or over 1838
  • Down Gap: will not chase at the open short
  • Note: Always check pre-market to see if price is considered support or Resistance.

Long or Short's to Consider after 15 Minutes

LONGS

Breakout/Pullback Long thoughts Will consider BO's or pullbacks on a down gap coming strong off support with room to yesterdays high. Will consider with an up gap or flat open if trading solidly above 1828.75 and the other indexes agree. Notes:

Fading Long thoughts: 
  • Major points to  target 1819,  at the first test. 
  • Notes: Prefer a a 5 point plus move into the location

SHORTS

Breakdown/Pullback Short thoughts: Will pass on breakdowns, may consider short pullbacks if trading below 1828 and price is not coming hard off support. Notes:    

Fading Short
thoughts:
 
  • May consider 1833.75 and 1828.50
  •  Notes: Prefer a a 5 point plus move into the location

Always study the overnight trading and mark Support/Resistance and confluence zones that could be used for targets, fading, pullbacks 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