Wednesday, May 15, 2013


1) ES opened below the days 1646.24-1648.76 WHITE ZONE.  The WHITE ZONE determines who has control; buyers above & sellers below.  With sellers in control my trade plan calls for a short with the first move into the zone.  Responsive sellers pushed ES back towards the 1642.75 low providing 7 to 8+ ticks from the initial push into the WHITE ZONE.  If you follow me you will find this is my primary & highest odds trade. 

2) Responsive buyers then pushed ES back up towards the WHITE ZONE WHERE it chopped for pretty much a solid hour.  The second time into any zone always has lower odds of having a rejection. Also important is to recognize when the market is in chop mode.  Inexperienced traders really get hurt in this tight whipsaw action.  I noted on twitter that less is more in this situation & to wait for the market to resolve before committing   

3) At the top of the hour we had resolution as ES closed out of the WHITE ZONE on a five minute candle.   This put buyers in control & triggered a long signal on the first dip into the zone. 

This is a major benefit of the WHITE ZONE; even if you can not get long, you know to use a great deal of caution putting on or pressing any shorts.  

Bulls proceeded to push ES into the 1651-1653 zone easily giving a 2 point profit target. Sell supply emerged at the zone,  but only enough to cause a small pause before pushing out the back of zone. 

4)  The close above 1653 generated another buy signal upon the first dip back into the zone which was again met with responsive buyers that drove ES to the 1656-1658 Initial Resistance Zone, again generating the primary 2 point target.  

A quick note here, under most "normal' circumstances I would not be eager to take a long here.  The market was very extended from the lows & I would normally expect a rotation lower.   We are not in a normal environment & thats just how it is.  Caution is warranted on longs & shorts.  If your struggling in this environment just waiting for an easier environment to operate in  is probably a good idea.

5) Buyers continued to push ES into & towards the back of the 1656-1658 Initial Resistance zone.  I expect responsive sellers at Initial resistance.  Buyers were not quite finished and made one more push out the top of  the zone towards 1660.  I tweeted that at this point I was not taking any longs unless we spent significant time digesting the move up or had a big pullback.  Again, i consider avoiding taking a losing trade as valuable as a winning trade.  The market had made an almost 16 point advance with no rotation lower.  As it worked out responsive sellers finally showed up in force and proceeded to drive ES all the way back to the top of the 1646.25-1648.75 WHITE ZONE.  This was a  retest of the initial break higher. It was in the last hour of the day & I pretty much avoid putting on new positions in the last hour. That being said I tweeted that buyers were still in control as long as we held above the WHITE ZONE.  In addition,  the markets overlying theme at all times is to punish chasers. 

6) Sure enough the touch into the WHITE ZONE brought responsive buying that drove ES all the way back to Initial Resistance.  Late shorts were smoked at the WHITE ZONE just as late longs were smoked at initial resistance.  Same song, different day.  Trades in the afternoon tend to have a higher difficulty than trades in the am.  You may want to keep that in mind if you are struggling in the afternoon.  

This can be a very rewarding business if you can create structure around a market that has no limits.  Once you create structure you can trust possibilities open & you can see so much more.  Opportunity becomes clear.  Without structure,  the market is a scary place with threats at every turn.  Hard to have a calm mind in that environment.

If you would like to learn how to think & trade like a pro you may contact me at

Hope everyone did well today.  Dont forget that its only one day of many.  

"Never try to be better than someone else. Learn from others, and try to be the best you can be. Success is the by-product of that preparation.” 
― John Wooden

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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