Friday Notes - Morning Strength

12:00pm - I almost forgot what it felt like to trade an uptrend. Yet with the TICK spending most of its time above zero this morning and the VIX downtrending, I've been biased to the long side in the U.S. session, buying pullbacks -- especially once 3LB (bottom chart) broke to the north and we broke the early morning range. The charts to the right tell the story (click to enlarge), along with the VIX which remains in a 15 minute downtrend as I type this, albeit stretched to the south a bit.

From here though, it's a crapshoot (thus the blog typing), as ES still hasn't broken its late Wednesday high just north of 970, and I've thus been exiting on each extension.

And while the decreased volatility should have be ramping the sizes upward, I'm keeping it light because (1) I need to get the feel of a less volatile market again, and (2) it's a Friday and last day of the month ... and I'm in major chip gain preservation mode today.

The brain cramp of the day so far was shorting the DAX too soon on its consolidation break, which has limited my net chip gain to only +$7K. It was stupid and cost me some tuition, yet I recognized it, quickly moved on, got some better wholesale shorts, and used those mental notes to be alert for a possible repeat in the U.S. session, which has been helpful.

1:21pm ES trying for the 970 break.

Been nibbling small sizes long on this last push, but keeping things very tight on a Friday. VIX remains in a downtrend and has extended from its late morning pullback.

1:25pm Ding, ding, ding ... think the whole world wasn't watching that? 7 point extension.

1:28pm Nice ... shorted 76.25 and exited/reversed on the pullback. Still keeping sizes small.

1:38pm Took FESX short on that last ES extension ... 2632 down to 2626 ... practicing for the future. Eric - I think I found a new toy. Surprised how thick FESX still is on what's now Friday evening over there. Emotion is emotion ... doesn't matter what country.

1:45pm Looking for an ES pullback toward 5 min support.

1:53pm Got it ... best entry 73.25 and exited on the pop. I'll let others go for the riskier further extension. Getting close to shutting it down here. Maybe one more long if we drop toward 70.00

1:56pm Nice ... best entry 72.00. and out on the pop. That was a gift.Going into major income preservation mode ... chip gain now + $12K (trailing stop +$10K), market depth thinning out, and I don't do Friday afternoons well. I'm also losing focus a bit, so that might be a wrap regardless of what the market does now.

2:17pm Passed on that last extension as the 15 minute chart got pretty stretched. Sellers hitting bids now.

2:22pm Nice read ... nibbled some long on the sub-70 emotional barf. You can just feel the emotional excesses in the trades. Sometimes I feel like tipping them ... especially since I'm sometimes on the wrong end as well!

So long as the VIX continues its downtrend, pullbacks remain buyable and shorts are scalps only on emotional price extensions for those nimble wholesalers. See the posted VIX chart for the "wind at your back" chart of the day.

2:47pm ES resistance at 980 for now. Only a ten point thrust so far ... hmmm. Path of least resistance still up though.

2:56pm Still doing light nibbling for long scalps on retracements. 980 resistance yet again. I might consider a small long on a trade at 981. Shorts must be getting tired as price keeps holding.

3:03pm Come on, giddy up.

3:04pm Sweet ... out. Actually chose entry from earlier pullback vs. the 981 in case the momentum died (second rangebreak of the day a lesser %). Best exit 983 and that's a wrap for today, the week, and the month before I do something stupid. Locking in slightly more than +$15K.

3:06pm Wow ... nine point Wyle E Coyote drop. Damn good decision.

I'll post the October #s shortly (warning: get out the motion sickness patch) for one final review before I head to Foxwoods and Mohegan Sun for a two-day poker marathon.

Keep the comments coming. I'll look at them and respond over the weekend ... there might just be some delay in posting and responding to them. We're also bagging the Sunday PM PalTalk lounge and going with Wednesdays for now.