Wednesday, January 1, 2014

Pre Market Thoughts Thursday - Happy New Year


ES/NQ 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.

  • 1840
  • 1837
  • 1833.75
  • 1829.50
  • 1823.25
  • 1818 
Trend Thoughts:  
  • Short term is bullish targeting pullbacks to the long side. 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: XLE nice bullish bounce back candle
   
Thoughts on the Trading Day and the  Month: 
  • Day: 1st trading day 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: 8:30 UE claims, 10:00 ISM Manufacturing

Gap Fill Thoughts: 
  • Up Gap: Will pass on fading an up gap.
  • Down Gap: Will consider fading a down gap near 1843.25, and 1840.25 
  • Note: Always check pre-market to see if price is considered support or Resistance.

Flat Open:  pass

Gap and Go Thoughts: 

  • Up Gap: Will pass on running with an up gap
  • Down Gap: will not chase at the open short unless clearly under 1833
  • 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 not chase any other breakouts and will consider pullbacks at support  Notes:

Fading Long thoughts: 
  • Major points to  target 1840.25, 1833.75,  at there 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 with a gap below yesterdays low that holds below the low. Notes:    

Fading Short
thoughts:
 
  • Make consider R1 or R2 with divergence after a gap up that holds
  •  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