Wednesday, August 26, 2009
Putting yesterday's ideas into action
Chart #1: The overnite and pre-market price action was all over the place, creating a big "going nowhere" box (not shown). The 8:30 Durable Goods news was "good" but the market went down to test the DOUBLE BOTTOM from 8-24 and bounced up. That was a somewhat high probability bounce, but I didn't play it because the bigger New Home Sales news was due out in a few minutes. I don't want to risk getting caught in a news volatility jerk until/unless it has picked a direction.
Chart #2: Shortly after that the 10:00 New Home Sales number hit and it created a VOLUME SPIKE right into the gap fill. I am a price created S/R (support/resistance) player. That's what all the horizontal lines are. The blue ones are gap fill levels. The big volume spike created price resistance at its high. Shortly after that the momentum carried price over the gap fill (and over that price volume resistance) and pulled back to retest the gap from the top. It wasn't a perfect test but the risk was pretty minimal. That's an entry long. A second opportunity long is the retest of 9529 from the top at 10:09 (once the first S/R level held (the gap) I expected the next higher to hold as long as price had a clean break over it and could then re-test it). A 3rd potential long was at 10:15 as it tested the S/R band of
9546-9549. It tested the upper band to the tick and rose some more. It topped out later on a negative $TICK dvg just short of the 9576 S/R level, that is also the VAH (market profile value area high) for yesterday.
Lessons learned: 1) Don't get bummed by "missing" trades. Prior to the 10:00 news there were some OK short opps that I just sat on my hands for. Instant amnesia helped. Hey, the day is NOT over at 9:45 am!! I had to FOCUS to catch the ones I did. And when they setup I just had to BELIEVE they would work and get in. You can't win if you don't play. And if they didn't work out, well, that's what stops are for.
BTW, as I'm typing this I just saw another good short opp at the 9546-9549 band that just worked good (10:57 entry). It is currently +25 YM points and only had 1 point of drawdown before dropping. DANG! I'm sure many traders were able to get in at lower levels than me (obviously...that's why there are price bars lower), but this is the method that makes sense to me and that I've spent a few years working on. You have to have a plan that makes sense to YOU, based on your perception of how the market moves. Once you figure that out, ignore other plans. .....Update: that short I
missed because I was typing this eventually made 26 points before having a pullback, and bottomed out at +36 points. And just 1 freakin' point of pain to get in that trade. I may have to re-adjust my posting schedule.