Thursday Notes - Order Restored

12:57pm Shortly after 11:30am ET, I wrote the following ADX figures down:

60-Min 14.10; 30-Min 11.36; 15 Min 8.83; 5-Min 9.30.

Can you say rangebound? ES continues to be completely trendless on all key timeframes in what could be the tightest and longest lasting range trade of the year.

The goal for today is simple: Be sharp, patient, and make damn sure you book a gain at end-of-day. And while this might seem a stark contrast from my "I don't care about the daily score" mantra, it's a required circuit breaker at this end whose intent is simply to prevent daily performance momentum from building up on the downside. So far, I don't recall a 3-day consecutive draw this year but you can verify by checking the Jan-Nov daily equity graphic in the left-hand margin to confirm. Point being, it's rare and would be a large warning sign for me.

The day started with two successful scalp sequences shortly before 4am on an unsustainable FESX cliff drop (going long the extension and then shorting the first pullback to the 5-min), before going back to bed. Ironically, I simply "woke up" at about 3:45am after not sleeping well (I wonder why), saw the opportunity, and took it. Then at the U.S. normal session open, I chose to take it slow in light of the Dec-to-Mar contract rollover which often creates an early chopfest, although ES clearly held the 885 area yet again, and continues to trade north of it -- albeit in the tight range.

So as we get ready to head into the afternoon, I'm holding on to just under a slight +$6K chip gain having traded only 240 FESX and 490 ES (total buys & sells), and am relying on this blog discipline to keep it north of +$5K that by the end of the day's trade.

Perhaps the best way to describe the market is "You First", as many are simply waiting for the breakout attempt pawns to stop getting captured before moving their rooks and knights into battle. (OK, it's been a long while since I played chess, but I think I got the terminology right.)

The VIX still suggests upward is possible, although so far, it's been more of "no further downward movement" than anything and has kept me away from shorting any perceived short-term break to the south. In any event, this can't last forever, although clearly we're not in Kansas (Sept-Nov) any more Auntie Em.

1:08pm Yet another feeble attempt at breaking to the north. This is starting to get very old. Tapping the right side of my monitor to see if that will help. Of course once that last frustrated trader gives it up, the break will occur.

1:23pm That might be it for the upside attempts, looking for PM short bias on pullbacks. Sticking short toe in water 895.50 small size (15 lot). Would be a helluva lot easier if the pace and volume picked up! Could be air pocket to the south if momentum builds. Will stop on a sustained trade over 897 ... also the 1-Min 3LB turn price.

1:30pm Added 896.50; Avg price 896.00 30 contracts. Not going any heavier in this pace.

1:38pm Scratched 1/2 on non-movement and 1-min 3LB turn; Back to 15 lot.

1:39pm Scratched rest; can always reenter. Slight negative on sequence, but irrelevant aside from making sure today's "circuit breaker" stays in place. Thought we might get a plunge similar to yesterday's -- which I butchered at the time -- but was probably too apparent. Pace sucketh and market depth thin as can be. 15-min ADX 8.18. That's sick. Maybe we rolled to the June '09 contract and I didn't know it!

1:51pm zzzzzzzzzzzz. Will the 2pm express show up today?

1:56pm ES air pocket down ... hard not to laugh. Right idea, but didn't want my capital in the market with no movement. Looking to short next pullback.

2:10pm Better; got back short in 893-894; out most on the drop. Missed the Express, but got the Local.

2:17pm Added small on drop and took it off, flattened on approach to 890 and low TICK.

2:20pm 2 point ES pop; good decision.

2:28pm Man, this pace is terrible. No flow to me is riskier as we can air pocket up or down at any time. Next high % short a pullback to the 5-min now. Sitting in 893s.

2:38pm Nice ... shorted 893s to 890-892 ... best cover 890.25. Small sizes still. The 5-min bias is there, but 'tis choppy.

2:44pm Not going to stew over profits left on table today. Also not too interested in fading this drop yet in case the range finally gives way as it could get ugly when it finally blows.

2:47pm Short 886.75 on TICK pop for small change. Respecting 885ish still on covers until broken.

2:54pm Shorted 884.75 to 881.00 on last push. Took most out for 1-2 pts and covered final 881.00. Strong read for someone who sucks on breakouts, but I just "felt" it. VIX also supportive of shorts on the 15-min cross up.

2:57pm This could get ugly ... buh-bye long supports. Will watch for a while. Market finally finding some rhythm. See if I can remember how to match it, but will be conservative. NOT giving away day's gains in the last hour.

3:06pm Might consider fading a further barf or shorting a sharp pullback, but the entry has to be pocket Jacks or higher. Day's initial objective remains very clear. Also already thinking to possible morning setups if the trend holds.

3:28pm Been doing some very light probe scalping with 15 lots, but not getting cute. Only entry I want for size is shorting an approach toward the former 885ish support ... unlikely we'll get there today as there has to be a ton of stuck longs now bailing on any upticks, but you never know.

For new folks, I don't typically trade much in the last hour, and especially strong trends into the close. Rather, I prefer the next day's more predictable oscillations. Just one person's style of course ... the preceding link to the July post pretty much covers why.

3:35pm Passed on that last short attempt as I wanted something closer to 880.

Decent reads today and nudged the modest chip gain up to a little over +$10K on a fairly low and efficient 1,630 contract trading (both sides, which is what I'll quote going forward). Essentially, a "grind-it-out" day.

3:55pm Shutting it down. Did pretty much what I had to today to restore order and will plan for the morning.

One last note is that I purposely stepped up the blog notes in the afternoon so as not to lose sight of what was happening ... there's the clear benefit of the journal and activating Dr. Brett's Internal Observer.