Saturday, November 21, 2009

OpEx Friday - 11/20/2009 Review

Friday played out beautifully, and the scenarios put together on Thursday night provided the preparation necessary to trade the price action in real-time. In the bearish scenario, a test of 1082.50 was anticipated below 1087, and we got that move in the overnight session at 6:10 am (cst): price hit a low of 1083.50, and closed at 1084.50 on the 5-min chart. I was anticipating a test of 1082.50, so not testing 1082.50 is also a valuable piece of information. That 5-minute candle at 6:10 am is a wide-range bar with heavy relative volume (heavy considering the time of day), and I would view it as a significant candle in terms of support/resistance. Mark the open/high/low/close of that bar - the levels could (and did) act as support/resistance in the near-term. Now observe the price action following that candle; price stabilized at the 1084.50 level and broke through the high of that significant candle (1087.50) at 7:30 am (cst). From there, price moved up and hit resistance at 1092.75 (Thursday's POC), and we then sold off all the way down to 1085.25 (78.6% retracement). What does this mean? Is it bullish or bearish? Well, lets see, if the sellers were really in control, I would expect a test of 1083.50, so score one for the bulls for halting the down move at 1085.25. Price then retraced back up to 1088 (a tick above the cash open at 1087.75), and sellers came in again, but this time, they could only push it to 1085.50. Again, if sellers were dominant, I would expect price to test the previous swing low at 1085.25. That didn't happen. Based off this information, I entered Long at 1086 with a 6-tick initial stop, which was moved to break-even once price broke above 1088. The stop was moved to 1088 (+2 pts) once price broke above the mid-point (1089.25). Price came within a tick of triggering the stop, and the exit was at 1090.00. Btw, I had a couple of other small trades prior to this one, but they were tiny winners (4-6 ticks), so I chose to detail out the setup that had some structure to it.

Options Expiration Friday
I checked out the chart from October's OpEx Friday (10/16/09), and see a lot of similarities between 10/16 and 11/20. I wasn't concerned with the absolute values/prices on each day; just the directional swings. Lets do a little compare & contrast between 10/16 and 11/20 and look at the similarities:
  1. Price sold off in the overnight session on Both days.
  2. Price retraced back up into the cash Open
  3. Price stalled and reversed within the first 30 minutes of the open. Price began reversing down at 8:45 am on 11/20, and at 8:55 am on 10/16. The exact times aren't really important, but it's an interesting coincidence.
  4. Price retraced back down on both days. Price broke below the Globex Low on 10/16, but wasn't able to get to the Globex Low on 11/20.
  5. Price then chopped around, and moved higher into the previous day's POC on 10/16 and 11/20.
  6. Price moved back down into the close, and the down swing began at almost the same times on both days.
Looking at price action for similar days in previous weeks/months is not a part of my trading plan. I just did this exercise because I saw many similarities. I don't know if there's any merit to looking at similar days in the past to get a heads-up on price movement, but I found this to be pretty interesting. If you have any thoughts on this, or have performed similar comparisons in the past, please post in the Comments section.

ES - 5-Min Chart (November 20, 2009)

ES - 5-Min Chart (October 16, 2009)


  1. My friend, you are becoming quite sophisticated in your analysis and trading.

    Nothing better than learning to take control of your own destiny.

    Nobody cares more about your money than you do, so why not learn to take care of it?



  2. Thanks for looking out E! Appreciate you stopping by :)


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