Thursday, May 16, 2013


1) ES  opened into the 1654.25 - 1652.25  WHITE ZONE at 1652.75.  The WHITE ZONE dictates who has short term control of the market; buyers above & sellers below.  Since ES opened down into the zone, but not below, buyers retained control & the open provided excellent trade location for longs.  Responsive buyers quickly stepped in & drove ES up & out of the top of the WHITE ZONE.  (2) With a close above 1654.25 buyers reaffirmed control & set up a push to the 1657.75-1659.75  Initial Resistance Zone. (3) I expect responsive sellers at initial resistance & often look for a larger rotation down than the normal 2 point targets I look for.  Responsive sellers did materialize, pushing ES back down to the WHITE ZONE & a bit more.  Part of becoming a strong trader is recognizing small changes in behavior.  Yesterdays push up was relentless with very small rotations.  Today had large (relatively)  in both directions.  This is more of an indication of indecision by market participant as apposed to overwhelming weakness  & cued me to look fro balance, which I mentioned on twitter.  Balance can be very choppy in the middle and really chew up traders & I opted to wait for a resolution.

4) Despite the new low and the close below the WHITE ZONE on a 5 minute bar, the indications of balance meant I was looking for a move back tot he middle.   You generally want to trade balance days from the outside (where its not to choppy) to the inside, where it tends to be very choppy & you want to avoid taking trades where its choppy.  Sure enough, responsive buyers stepped in and drove ES back to Initial Resistance. (5) Initial Resistance provide fantastic trade placement to the short side all day.  Again, its an important skill to recognize what type of day you are in and adjust your trade strategy accordingly.  Bottom line Initial Resistance Zone was money all day long. Every touch provided a tradeable short entry.  Trailers paid particularly handsome all day. 

6) As we moved into the afternoon trade buyers had nothing left to push with and sellers finally gained the upper hand pushing down through the WHITE ZONE & down to the 1648-1650 support zone.  While the top to middle of the zone did provide a pause sellers were able to push down through the zone if ever so briefly. The strongest bout of selling came in the last hour. I can not emphasize strongly enough that the last hour is hard 7 countra trades are low odds trades.  Does a trader no good to catch a portion of yesterdays last half hour run up if you give it back today.  Successful professional trading is all about building wins; one on top of another.  Its not entertainment, its a business.   

Bottom Line,  Trade Location is everything.  chasers get smoked,  patience and strategy get paid.  It takes time to develop all teh skills necessary to bring it all together.  One thing that this blog should make clear.  You only need one trade. Once you have that one trade you can take your time in developing your other skills.  I am tired so I am going to leave it at that. Its nice to have consistently good trading opportunities throughout the day.  Summer is coming & it wont always wont be like this.  I for one am grateful for it.  

“When you decide to attack, keep calm and dash in quickly, forestalling the enemy...attack with a feeling of constantly crushing the enemy, from first to last.” 
―  MusashiA Book of Five Rings: The Classic Guide to Strategy

Notice: This Blog & its contents are intended to be for educational purposes only & not to be construed as trading recommendations  in any way.  You should not follow anyone blindly.  Trading Futures & Options on Futures involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions are subject to change at any time.

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