Morning Update: 1/18/2012

11:30 pm…

The market indices opened with a big boom today. A gap to the upside ran nicely in the morning on NQ_F, but the ES_F backed off of it in a falling wedge. They did try to rally, on the NQ_F back up to its high, but was unable to get through, while the ES_F negative diverged. They then rolled over in the afternoon, rather sharply, bounced into the close and was able to put up some decent gains for the day. Stepping back and reviewing the hourly chart patterns, the indices gaped up, ran hard in the morning, stabilized, but the ES  failed to follow through on the midday highs on the NDX and confirm. As a result, the index’s rolled over in the afternoon,  tested support, and did indeed bounce late into the close and held support.

As I write this update the ES_F is bouncing off of that support area established during RTH. 1285 area is the first area of support that needs to hold. If we loose that 1272, then 1265. On the upside if we break 1302 then 1317 is likely.  News tomorrow… CORE PPI, PPI,  INDUSTRIAL PRODUCTION (MoM), TIC NET LONG TERM TRANSACTIONS.

I did not have any trades today as I wanted to see how the market reacts to china GDP and any other business from the weekend and open. This often is a good chance to see what type of  “mood” the market was in.

This week  the primary weakness that I would like to work on is using the trade calculator for every trade in order to validate that the  position size is right. Also,  I need to scan more charts during market hours and not rely on the setups I know make me money. I find myself doing the same trades everyday and it’s somewhat getting boring even though I am making an awful lot. Lastly, I want to use TICK more on entries to have better timing on each setup. In the long run I feel this should help with transaction costs and thus my overall bottom line.

The strength this week I would like to reinforce is my commitment to my trading plan everyday. Moreover, my continual pursuit and  fundamental understanding of probabilities, without which makes this game extremely difficult.

We will see if we get any type of follow through tomorrow. Or is a reversal is in the cards?  We shall see…

This Weeks Trading Basket: (High Probability Trade Locations)

GC_F, ES_F, NQ_F, ZB_F, YM_F, 6B_F, DX_F,  TF_F

Olof Thomas


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