Tuesday, May 5, 2009

Tuesday 05/05/09 - Minor Pullback

Narrow range day today (11.25 pts). 887-890 was solid support in the ES, but we did get several opportunities to short at the mid-point. With the big up-trend day yesterday, consolidation in this area was expected. But typically when price is below the 1st hour low in the afternoon, it tends to close at or near the lows so I was expecting a break of 894, which we got but without any follow through. Instead, price hit 893.50, and then quickly re-bounded back up. The NYSE $TICK moving averages also hovered close to the zero-line most of the day which is usually a recipe for choppy price action. On the 60 min chart, today's pullback was very minor (23.6% retrace of 862.50-904.75), so the bias is still bullish but everyone and their mother can see that price is getting over-extended to the up-side here. But maybe that's the problem: everyone's expecting a pullback, which is a good reason for price to continue moving up.

I was able to scalp for +6.25 points. I didn't have time to markup the trades on my chart today but gains were split pretty evenly among Long and Short trades.

This brings me to a question; do you adjust size and risk management parameters on consolidation days (day after big trend)? If so, what kind of adjustments do you make? For example, reviewing today's price action, there were several areas where you could be in a trade, and ADD to your position even if it went against you by a few ticks, and still have manageable risk on the trade since the support/resistance areas were clearly defined, and a big up/down move wasn't expected.

On to the price action charts...

ES 610-Tick Bar Chart (Open and Morning Price Action)

ES 610-Tick Bar Chart (Afternoon Price Action)

ES/$TICK (3-Min) - Notice where $TICK MAs spent most of their time


  1. hi
    the way i adjust for change in 'volatility' is using ATR because it changes with the market. So my position size is based on teh ATR size. I trade the forex market, so I don't know if that can be applied in emini. trade on!

  2. Fantastic performance today man! If you pulled nearly 7 out of today that is insane performance.

    Keep at it!

  3. Matt, I was up/down all day man, and honestly I would grade today as B- on my part. I was really frustrated at times, and missed some very good opportunities. Had to grind back to a gain by taking 1-2 pt gains over and over.


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