Thursday, July 24, 2008

Thursday's Notes & Market Bias

11:17am OK, let's start blogging for today. Not as much on my game as I was yesterday, yet having a decent day given the early intraday bear trend that began evolving immediately after market open ... the 10:30-11:00 chopfest notwithstanding. Shorting 5- and 15-minute downtrend retracements and covering on the extensions (or the same thing contra-trend in reverse). Immediate trend is extended a bit so watching to see if we get lunchtime capitulation toward the 1264 support area. Buy orders queued in the 64s if we get a spike down and will go to market if it gets close on a pause. Want one more push here (11:29am).

Like every trader, my entries and trade executions are full of imperfections. And some days, they downright suck. A bit early, a bit late, too small size, too large size, system outages, missed fills, distractions, yadda yadda yadda. This is where market bias comes to the rescue which seems to be the case in today's early trade. Nothing like market bias confirmed by half a dozen indicators on multiple timeframes to make up for what will always be imperfect executions.

11:35am Nice. Best fill 65.50 on the pause and out on the reflex spike. VIX at HOD; 5 min trend and 3 line break still south. Could get strong support here from Tuesday's range break. Some Tick-Price strength divergence on that last drop. Prefer to see a 1 min turn though to hold longer off that support. Any turn likely to be tricky given approaching lunchtime pace. Resistance now in the mid 1270s for next strong short opportunity which is my main focus for re-entry. 15 min oversold and want a deep retracement. Want some meat on sizing there if we get it.

12:12pm zzzzzzzzzzzzzzzz. No decent retracement to short.

12:35pm Not as interested in longs here unless we get a clear 1 min turn. 2pm should be interesting if volume comes in. Does this support hold? Note 5 Min 3 Line Break has had no turns since open:

Needs a period close above 1267.75 to change. 12:52 Nibbled on a short sequence at 68. Still want a stronger move up to short size. Keeping sizes very modest thus far.

1:30pm Stuck my toe into a long tester and stubbed toe for 3/4 point. Fortunately, it was only the little toe testing the water. Note to self: Resistance trend lines approaching from north, so shorting further move up may be troublesome. Now we seem in more of a breakout mode heading into the PM. Stay flexible Don. Will retry long on trades going off at 68. Could squeeze shorts toward 72. Not interested in breakdown shorts at these levels. Dow -164; ES -17 on day. VIX potential further move north on 15 min. Conflicting signals = stay on sideline. Plus, I'm a terrible breakout trader.

2:08pm VIX winning for now. 5 Min 3 Line Break still short. 13 consecutive short bars. Rare.

2:16pm Volume spike on breakdown & VIX pop off the above coiled chart. Lack of long trend change triggers kept me out of intraday trend reversal trade. Strong reads Don. On sidelines and watching. Tough to short down here, but better flat than long! Maybe one tidy short scalp on a move toward 63. Won't stick around long if we get it with tight stop.

2:23pm ES ticked 62.50 ... I'm sitting at 62.75 and won't chase. Only want 3/4 pt on scalp. Will cancel if not filled.

2:25pm Pulled order. There's the imperfect market at work. Scalp would have been good for 1.75 max, but fills would have been tough and I would have had to be wholesale on both sides. Maybe 1 point was doable. If it implodes further, I don't care as that would queue up tomorrow's post-trend sequence yet again. Not going to get cute. 90 mins to go.

2:35pm So much for Tuesday's support. Investors gritting their teeth again (if they have any left). Glub, glub, glub. In hindsight, a bit conservative on that post-breakdown short miss, but I'd rather let an extended trend extend further than get caught the majority of the times when there's quick intraday capitulation and turn. That's my excuse anyway. I hate afternoon trading!

Updated 5 min 3 Line Break: 19 consecutive bars.

3:00pm Bar count now at 20! Needs a period close above 61. Watch them frustrate all the bottom pickers by turning in the last hour. I see lots of cute/heroic scalp entries, but that's what they are ... cute and heroic. No thanks. Too much slop and starting to think about tomorrow's plan but that depends on how we close. Still sitting on AM profits.

3:09pm Finally got that short sequence from 63.25 (nice wholesale fill ... someone panic covered at the wrong time). 5 Min 3 Line Break finally turned up. Keeping sequences tight. Doubt we'll see the lows again now ... if we do, all the better for the morning. Eyes now on tomorrow. Chip count +$11K on the day on only 565 contracts (extremely low for me).


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