Monday, January 6, 2014

Pre Market Thoughts Tuesday

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
  • 1814.25
Trend Thoughts:  
  • Short term  short term is neutral to bearish and still trading in the bearish down trend. Targeting pullbacks to the long side at the bottom of the channel and shorting inside the channel. Many unfilled gaps on the ES over the past 2 weeks. Took one out today and may take out another tomorrow. NQ remains the weakest index in bearish tight range channel.
  • Longer Term remains in a bullish up trend
S&P 500 Sectors: 
  • Strong Sectors: XLF
  • Lagging Sectors: XLU
  • Notes:
   
Thoughts on the Trading Day and the  Month: 
  • Day: 4th trading day has no historic preference.
  • 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 Trade Balance

Gap Fill Thoughts: 
  • Up Gap: Will consider fading under 1826
  • Down Gap: Will consider fading a down gap near 1808.25, 1814.25 and 1817.25
  • Note: Always check pre-market to see if price is considered support or Resistance.

Flat Open:  pass

Gap and Go Thoughts: 

  • Up Gap: Will consider if solidly above 1827 and at 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. Will consider BO or pullback long with an up gap or flat open if trading solidly above 1827 and the other indexes agree.   Notes:

Fading Long thoughts: 
  • Major points to  target 1817.25, 1814.25,  at there first test.  Prefer divergence in taking a long.
  • 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 1823.50 and price is not bouncing strongly off support. Notes:    

Fading Short
thoughts:
 
  • May consider 1829.50 and 1832.50 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