Wednesday, January 8, 2014

Pre Market Thoughts Thursday

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
  • 1838
  • 1834.25
  • 1829.50
  • 1823.25
  • 1818
     
Trend Thoughts:  
  • Short term is neutral targeting fading off multiple support/resistance. Many unfilled gaps on the ES over the past 2 weeks. One above and two below. No real direction in the ES until Wednesdays high or Low breaks.
  • Longer Term remains in a bullish up trend
S&P 500 Sectors: 
  • Strong Sectors: XLV 
  • Lagging Sectors: XLU 
  • Notes: XLV new high
   
Thoughts on the Trading Day and the  Month: 
  • Day: 6th trading day has no historical bias.
  • 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,

Gap Fill Thoughts: 
  • Up Gap: Will pass on fading an up gap. More risky trade is to take the gap off yesterdays high with a goal past gap fill to the PP.
  • Down Gap: Will consider fading a down gap near 1827, and 1825.75 
  • Note: Always check pre-market to see if price is considered support or Resistance.

Flat Open:  pass

Gap and Go Thoughts: 

  • Up Gap: May consider if clearly over 1835 and is considered support. 
  • 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 not chase any other breakouts and will consider pullbacks at support if clearly over 1835  Notes:

Fading Long thoughts: 
  • Major points to  target 1826 and 1814 and other points mentioned above with divergence.
  • 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 under 1825.50 and no strong bounce off support. Notes:    

Fading Short
thoughts:
 
  • May consider 1834.50 and points mentioned above with divergence.
  •  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