WED - 1-05-2011 - (DAY SESSION PART 2) SUMMARY - Another straightforward day of trading in terms of big picture analysis. Price started higher early in the session, held 1263, and then moved up to the 1270 target area. There were nice buys setups along the way at 9:40, 10:06, 10:16. Once the 1270 resistance area was reached a bit more caution was advised in terms of momentum C1 trades, but intra-day structure remained up and buy opportunities developed at 11:06, 11:24 for small gains to new highs. Another buy at 12:38 would resulted in small loss below pivot lows at 13:25 followed by another small gain from a buy at 13:59 that moved to new highs. If you were looking for countertrend trades near big picture resistance, a 1271.50 entry at 12:02 (expected pullback to 1270) would have broken even, and a 1271.50 entry a 13:26 (swing high failure) would have resulted in a .50 loss above pivot highs. Overall just a clear up day from the start, to a clear target, with nice long opportunities, as price moved back to the highs made two days ago.
MACRO VIEW Here is what I am expecting when viewing the big picture of the ES market. Such big picture views don't necessarily effect day-to-day trading, but when you form such expectations, it does come into play in terms of bridging together developing structure with either falling in line with, or deviating from expectations, which can be very helpful at certain key times. For a while now, I have been targeting the 1280 area. We are almost there, and the market clearly has moved almost straight up, with only one pause back in November. The market is going to go where it is going to go. It might move past 1280 closer to1300, or it might fall a bit short of 1280, but it seems like we are nearing a point where another pause in the big picture uptrend should develop, and it makes sense the market should consolidate back to the 1220 area when the pause process begins. For now the trend is up, and when and if the pause begins, a breakout below a short-term balance should lead the way (now at the 1260 area), but can change as the trading sessions ahead unfold. Until this happens, I will be looking for signs of rejection (responsive selling) as price attempts to move higher as a precursor to daily price moving lower to start the next pause in the big picture uptrend.
THURS - 01-06-2011 (OVERNIGHT-OPEN) MACRO â The ES has broken out of the 1200-1050 bracket on the way to the 1280 area. After pausing inside 1258-1250 consolidation for 7 trading sessions to end 2010, price gapped higher and met some responsive selling, and now we are monitoring the 1273-1258 bracket. OVERNIGHT/OPEN - Overnight price breaking above 1273 so we will look for acceptance or failure of breakout in day session part one as we watch rolling pivot/price action first movement. For price to move back to 1273 -1258 low, it must break 1270 key support, otherwise we will see either continued higher price today, or early chop between 1276-1270, with a likely breakout one way or the other later in the trading session.
THURS - 01-06-2011 - (DAY SESSION PART 1) GAP/FIRST MOVE/FIRST RETRACE - Price started the session lower and an opening price/volume/pivot sell developed @8:32 (1272.75) for small gains as price moved to 1270 support. A retrace move developed higher with no clear trade signals as price stayed inside the 1273-1270 zone that developed during the second half of yesterday's trading. When viewed in terms of a continuation from yesterday, the big picture bias is overall up until 1270 is taken out (no sells), and an aggressive chop type buy developed @ 9:20 (1272.00) as a confluence breakout of volume, price/moving average, and price /pivot all developed to the upside at the same time as you held an up bias. From overnight price action, price is still in overall 1276-1270 mechanical chop, so once if the intra-day highs at 1273.75 are taken out, the intra-day bias is confirmed up with the big picture, and expect a move to 1276 area. Then, stay with up bias, and monitor price action as price tries to take out overnight highs for upside continuation, or not.
THURS - 1-06-2011 - (DAY SESSION PART 2) MIDDAY - After a brief attempt to take out the intraday high at 1273.75, price fell sharply to new intra-day lows @9:59 which was a clear rejection to move higher, and set the trading trend down. A nice sell immediately followed @10:01 (1270.75) and price moved through 1270 support and right to the expected 1266 swing level target. Expectation is now for price to move back to 1270-1258 lows until proven otherwise (i.e. - 1270 taken out, or failures at 1266 support) A C2 sell @11:00 (1268.75) offered small gains or breakeven, and after price moved up to test 1270 resistance again, another C2 has developed @12:27 (1267.75) for an expected move to new intra-day lows and beyond. Stay with down bias as long as 1270 holds.
THURS - 1-06-2011 - (DAY SESSION PART 2) 13:00 - After the most recent short trade was stopped out above pivot highs at 1269.00, price moved higher above 1270, and bias is now up as price was rejected moving back into the 1270-1258 bracket.
THURS - 1-06-2011 - (DAY SESSION PART 2) 14:00/SUMMARY - After the bias turned briefly up at 13:00, the first C1 long trade @ 13:30 resulted in a second small loss in a row as price moved back below 1270. When a new attempt at an intraday trend fails with sharp pullback this is the sign of chop which lasted through the rest of the trading session. This was a day of three false breakouts which is certainly not typical. Overall, there were some good trades early, and two losing trades late which isn't too bad considering the tricky intra-day environment that unfolded today.
FRI - 01-07-2011 (OVERNIGHT-OPEN) MACRO â The ES has broken out of the 1200-1050 bracket on the way to the 1280 area. After pausing inside 1258-1250 consolidation for 7 trading sessions to end 2010, price gapped higher and met some responsive selling, and now we are monitoring the 1273-1258 bracket. OVERNIGHT/OPEN - Price is now is 1274-1267 chop with an up bias when daily prcie action is considered, however a case can be made that 1273 resistance has been tested twice (trend day up, then 2 days later) and we will bounce back down to 1260 again. It's a tough call in terms of expectations. Best thing to do is play this as a 1274-1267 chop area. The longer chop continues, the more powerful a breakout will be, and/or a breakout-failure depending on price action at the time. The price/volume bias appears to be up at the bottom of chop, but we will see when the open rolls around.
FRI - 01-07-2011 - (DAY SESSION PART 1) GAP/FIRST MOVE/FIRST RETRACE -Leading to the open price moved higher off the 1274-1267 chop lows and an immediate price/volume buy set up developed @8:33 (1271.50) for small gains when the overnight highs at 1272.50 were taken out as price moved to the top of the 1274-1267 chop area. Price then dropped sharply from 1274 to start the true first move of the day lower which set up a price volume chop sell @8:48 (1270.50) which provided additional gains as price moved down to the 1274-1267 low area as expected. The first retrace higher moved back to the top of chop with no real opportunity to get long, so day session one ends inside chop without a clear intra-day structure bias. If the 1272 area holds and price/volume/pivot starts lower (below 1270)look for intraday lows to be taken out to confirm an intra-day bias down to start. If not, then price should work higher above 1272 to eventually test intra-day highs and the bias will turn up if these highs can be taken out. For now it's a chop area with an up bias until an intra-day structure bias becomes clear.
FRI - 1-07-2011 - (DAY SESSION PART 2) 10:30 - Once 1272 held and price moved below 1270, expectations were for intra-day lows to be taken out (1268.25). This set a down bias in place for the trading session for price to test overnight lows (1264.50) and this down bias also coincided with price moving to the bottom of the identified big picture 1273-1260 bracket. There were many C1 sell setups in a row to take advantage of these big picture expectations in a variety of ways (scalp sell gains or bigger sell gains) With many momentum sells in a row and price reaching 1261.75, time to wait for a deeper pullback before selling again for a test of intraday lows, and the 1260 area. Perhaps a countertrend trade will develop later if 1260 major support holds but this will take time to develop as will any new swing high structure to turn the bias up sometime later in the session If 1260 breaks, 1255 is next stop inside the 1260-1250 bracket.