Tuesday, December 30, 2008

Tuesday Notes - One ...

6:00pm And then there was one.

So is this how it ends? A closing afternoon trend setting up the infamous morning after trend oscillation sequences? A morning pattern that has accounted for a good chuck of this year's Bamboo trunk? Could there be one last trade setup before Old Man Time (2008 version) officially leaves the stage?

First things first: In terms of today's trade, I continued to take it light (582 contracts ... a.k.a. tiny), nibbling from the long side with the VIX and five minute trends at our backs in the morning for a nominal chip gain of just over +$1K. And while volume was "slightly" better than yesterday, that's like saying Brett Favre had a better game last week than the week before. At this end, my interest remained luke warm in light of the low volume, sporadic pace, and complete lack of trader emotion as evidenced by the VIX which could actually tick under 40 in the morning. So we'll tip our hat to the investors and swing traders long the market today (we can probably count those days in 2008 on one hand) and get ready for one last round.

And now all eyes turn to tomorrow, and my goal is simply one or two strong sequences before ending the 2008 race once and for all. It's been quite a while since we had the closing afternoon trend to set up the morning trade, so tomorrow should provide one last bite at the apple ... assuming -- and this is key -- that there are enough traders active in the market tomorrow who are either stuck with short positions or ticked off at missing the last 15 minute 8-point climb.

This market actually reminds me a bit of the early fall, as traders had to make a mental transition to record volatility, except on the flip side as the same traders try to make the transition to a rather unemotional creeper market without inflicting too much damage on themselves as the market changes yet again.

And when the bell rings at 4:15pm tomorrow, I'll post my final thoughts on the year ... much of which I wrote last night as I reflected back what was a historic year in many ways. It will be a very special time of personal reflection for me, and I hope it will be inspirational for all who have joined me on this journey.

Yet until then, there's one more step to take. In many ways, tomorrow will just be another trading day. For some, it will be an important portfolio window dressing day which typically accompanies the last day of the quarter and year.

For one trader, it will be the culmination of a decade's worth of preparation and 366 days of sweat and toil.

I'll see you after the bell.

3 comments:

trader said...

Hi, Don. Do you think you have adapted to the low volum and volatility market?
I have lost three day in the past three days. It is so hard for me to profit as a scalp trader.Do you have any recommendation for us?

Don Miller said...

Hi Trader -

No, I haven't adapted particularly well, although I seem to have avoided major trouble over the last week by staying on the sidelines ... in part given my "holiday" vacation and desire to keep things light.

As I mentioned in today's post, the market may be going through a change similar to the early fall, except in reverse. Rhythms change and often it takes time to adapt. My "eye" is still trying to get used to the lower volatility.

The holiday 2-week volume is also incredibly light, which is providing for a tough pace at times, but that should pass.

I make most of my strong keep in a volatile, emotional market, which for the most part is absent right now.

While I don't "recommend" anything in this blog, all I can do is describe my current thoughts and that's pretty much what I'm thinking. Adjusting size and price movement expectation if the volatility continues to decline may be necessary for me, although I'm personally not too concerned as many trader will remain on vacation until Monday.

Don

Mark H. said...

Don, congratulations on a fantastic journey!! And thank you for having us along for the ride. I have learned much from this blog. Not the least of which is the strong reinforcement that trading is a performance activity and one needs to focus on that, not the search for the "magic candlestick."

May you and yours have a happy and healthy 2009!