Morning Gameplan

Currently the futures are down a good 7 points on the SPX or 70 points on the Dow, however what I am looking at this morning is to put on a counter trend trade. I am going to try to fade this gap back up into it's daily pivot, there I will assess price action and see whether I should hold my long position for more upside action or sell my longs for profit and reverse to the short trade.

Here is my thinking, above the 15 minute chart from Friday into overnight and current. If you draw a fib retracement from the High from Friday to the low, you get a 50% retracement at 1030.25. Look where we hit and sold off, that very same area. These percentage moves are powerful, I can not stress this enough. After studying in this subject I no longer use a single indicator, just the TICK. Anyway the target for this short trade is the -23.60 line at around 1018. I will look to cover my short around that area. There I will look for the long to play the gap fill, more often than not this will be filled in the first hour at least half way, if it doesn't you know a trend day is developing and to place your next trade in the position of the trend.

Daily Pivot = 1029.50
Gap fill = 1027.50

Watch these numbers carefully, and good luck!

ES EOD

Well we did have that explosive move predicted, unfortunantly it came after a good 12 point sell off, so for those who didn't watch the whole day unfold it doesn't seem nearly as big as it was!

Looking back I think that was a brilliant first move by the market makers since CPCI was so high, I am sure it shook out a lot of weak longs as well as shorts just eager to cover for profits nowadays before the move up and eventually to new highs more than likely this week. Pivot points worked extremely well today, if you just sold pivot in the morning and bought the breakout in the afternoon, you would have made out very well as I did:)

The shakeout!

First off I know a lot may not want to hear this, but personally I can not wait until summer is over, just for trading purposes only. These summer doldrums have been painful at best, combine that with the consolidation patterns we have been having and you have chop that can chop chop your trading account if your not careful.

Anyway here's the 5 minute chart of the day session, I said early on to take profits early as possible. We sold off pretty well off the bell, however the volume was light, meaning not a lot of participation. Chances are it was a shakeout of weak longs before making new highs. We rallied off of support 2 at the 1015's, but we are still in a valid short setup around the 50% retrace of this whole move. I would be extremely careful opening any positions right here until we get a clean break either way. If this short setup becomes valid a target of around 1010 would be a legitimate target.

Serious Bull flag formed on the ES

Above is a 15 minute chart of todays ES session, notice the consolidating bull flag pattern formed. The break and ending of this move whether up or down should be explosive. At this point I would have to lean to the positive side.

It has been tough trading last few days, can not wait for the the fall, for the fact that our trading especially during the doldrums (11:30 - 2pm) should produce cleaner percentage moves and not the MESS we have been having lately.

I made my money on the long side in the morning session as noted in the previous post, I saw and pointed out the bear trap forming and went long until I was eventually stopped out with 8 points profit on the day. Then I let the others fight it out as I sat back and watched.

SPX update: 1039 becomes solid resistance

• Here is the weekly chart of the SPX for the last 2 years, I have drawn a retracement from the highs in September '08 to the lows of March. As you can see we bounced off the 61.8% retracement level in the am and sold off the rest of the day.

• We have one more retracement resistance level, if you draw from the highs in May to the lows of March (not shown) we have a retracement level at 1050's which should provide some resistance as well. These two levels are the bears last chance to hold this market down. Once we break above the 1050's we should have a run up into the 1150's area at least before any major correction may take place.

• I ended up taking the day off, I may take the whole week off. Simply because with key resistance levels and consolidation, it becomes a tough back and forth battle that I try to stay out of if I can do so. Let them fight it out and just jump on the side of the winner, riding the band wagon all the way!