Jay's Journal

[firewalker99]

Please let me know if this is the idea you are talking about or if I am way off.I have put an image below to help show my understanding. I really appreciate your input to my journal FW. I haven't yet looked very long at yesterdays trading because I was out injured but I'll look at it soon to see your example at 1405. Thanks again mate.

No you are not way off, I think you are spot on!
As for the chart with the volume by price indication, I use the same principle, but my intervals are greater. I've found it difficult to work with S/R levels that are only 2 or 3 points apart, so I tend to use a bigger time frame to determine the heaviest trading zones and then zoom in to an intraday chart to see where the actual turns or reactions take place.

Like 1395-1396 is what I have also, but then 1397-98 is too close for me. The next support on the way down is 1388 for me. But like I said, I'm not necessarily right and your method might be more beneficial to your trading method.

Good journal

 

[firewalker99]

Here are the zones I'm looking at for May 1st:

Resistance

1390-1390.5
1394.50-1395.25
1399.1399.75
1403.50-1404
1407

Support

1384.25-1383.75
1380.5
1377.50-1377
1372.75-1372

Look how close they line up with what I have:

R at 1388, 1395-96, 1404-05
S at 1383, 1377, 1372

 

[jasont]

Thanks for that FIrewalker. Sometimes I do find the 2-3 point S&R zones are too close. I generally don't like putting them too close together and it is something I need to work on. I have found over the past couple of weeks that with the lowered volatility has made my S&R zones closer together and smaller.

Are zones are reasonably similar, I notice you seem to stick to whole numbers instead of the quarter intervals. I have heard a lot of the professional traders tend to only use the whole numbers also. Do you mind me asking the reasoning behind this? Thanks again for your great support and help Firewalker. It is greatly appreciated.

 

[jasont]

Trading for May 1st

Here is the journal for May 1st:

Today we have the ISM Manufacturing Index at 10am which is likely to be something to watch for. During after market hours we had a few reports come out at 8.30am which caused the market to turn from it's previously rising trend. We look like we will open close to yesterdays open price so anything is possible today. Will wait for the market to show signs of direction.

9:48 We opened pretty much at the same point we closed and made a small move down to 1383 and found some support. The Tick has shown strength early on with a reluctance to stay below the zero line. We are currently meeting the EMA on the 5 minute which could give me a better idea of how this market is trading. I still need to be mindful of the report due out at 10am so trades before then are not the best idea.

10:02 the action after the report at 10am was intersting to watch. We initially had some weakness but the Tick showed the stocks unwilling to begin a selloff and we bounced from just below the zero line on the tick. We also saw a bounce from the SMA on the 2 minute. According to the Tick the stronger side appears to be the buyers right now.

10:16 I entered a long position at 1389.25 for a bounce from the SMA on the 2 minute chart and a bounce from the zero line on the Tick. My original profit target was at 1390.75. The market was fluctuating a bit but for some reason I felt it had lower to go before getting a decent bounce. After looking over the pattern a bit more, seeing a bounce from where we were didn't make sense. We hit the slow EMA and had tested going below the zero on the Tick twice. To me we weren't yet showing the strength for a decent sized move. I got out of the position concerned that my edge was losing odds for a 1 tick gain. The move just didn't appear right to me.

10:30 Ok so the bounce I was looking for did appear, I was just a tad early.That seems to be the theme for this week. I will try giving myself a bit more time for trades to develop and see how that fares. We seem to be getting stuck at the slow moving EMA and the Tick still appears to be losing strength but rejecting moves below the zero line. The two EMA's are converging which usually makes for an ugly period of trading. I'm going to wait this out and see which wy has more strength.

10:45 I put a buy order in at 1389.25 but once the market moved away from it I removed it. It wasn't the best place to be in the market after looking at the circumstances. The Tick is currently neutral, teh SMA is above the market action so is the slow EMA. The fast EMA is riding the market action. Things aren't showing a strong edge, could possibly have been an impulse to get in the market. Will stay out whilst we sort ourselves out.

10:49 The move did come that I had an order for but the edge still doesn't appear to be as strong as I would like to see. I'm happy I stayed on the sidelines instead.

11:01 This market is far from interesting right now. It as slowed right down and is playing above and below the SMA and EMA's. This usually indicates to me a market unsure of it's direction or possibly a period of acculmulation. Either way we apper to be at a stale mate for the moment. The Tick has been gaining in strength which is the only possible indication of direction for me right now.

11:18 We broke to the upside and now have hit the 1394.50 resistance area. We are stalling around here looking for an opportunity to go higher but I suspect a slightly bigger pullback may occur first. The Tick is staying above the zero line still showing strength from the stocks.

11:35 Well I guess I had too much patience for that bigger pullback. I let it come down further but waited too long and it moved up without me even looking at placing an order. The Tick was showing some increasing strength but I thought the move we saw would push a tiny bit more but instead it just took off a bit higher. I'm not too worried about missing it, there are plenty of moves, days, and weeks in the market. The benefit of trading with a discretionary approach is that I don't feel too bad about missing a trade and disrupting my odds. In fact my odds are better for picking and choosing trades.

11:49 I don't know what to make of this market right now. It looks like it wants to go higher but there is a heck load of traffic wanting to sell above it. It keeps attempting to make the higher run but gets hit back each time. The Tick is starting to look a bit exhausted right now but that could change. I wouldn't be too quick to jump on a short trade though.

12:02 Well it has been pretty uneventful for me. We are seeing what could be the beginning of the turnaround in today's market after the rejection of the range break to higher prices. I'm going to call it a night, it was a reasonably choppy day and not many solid opportunities stood out. It appears as though we were still in decision mode from the Fed's rate cut so hopefully we see something happen later today to loosen up tomorrows action.

Daily Wrap Up

After coming from two losing days in a row I seemed to be taking it pretty conservatively. I am actually happy that I take that approach as sometimes I'm just not on my game and it's best to weather the storm rather than try to push harder. This week has been one of those weeks where my timing hasn't been at its best and signals are mixed. I can't work out if it's the rough market action we are seeing in the morning due to this weeks Fed announcement or if it is a lack of concentration. I do still seem to be picking the turns but just in a little bit early like I saw today.

My trade today was a good idea but I sensed I was too early and managed to get out for a small gain. The market went to within 0.25 of where my stop would have been but I don't like leaving trades go that far unless I still feel my edge is there. There really only was a couple of trades that I could have taken and apart from those the market was very back and forth without decent looking swings. I'm sure there are people out there who love to trade that type of action but it doesn't suit the way I like to trade.

It was probably good to get a winning day on the board, granted it was only a 0.25 gain but psychologically it helps after two losing days in a row. For following my focus I am giving myself an 'A'. My time and attention was directed towards watching the charts instead of looking for trades. Just seeing how the market traded rather than see where I could get in.

My trade management was good where I was able to get out of my entry which was a touch too early without taking damage though it would have been nice to get the second entry in. My journal entries were good and I recorded where I placed an order entry and removed it. It turned out it was a good trade idea so I will continue to monitor those. My risk and money management were good as well.

Trade 1: 0.25 Win

Daily Result: 0.25 Gain

 

[jasont]

Trade Setup For May 2nd

Here are the areas I'm looking at for May 2nd:

Resistance

1411-1412

Support

1404-1403.50
1397.25-1396.50
1392.50-1392
1384.25-1383.75

My Outlook

Well it appears as though we saw the upside break that may signal further strength from the market. The DJIA, SP and NDX have all now clearly moved away from the range that began in January. The NYA is also now playing above the EMA 50 on the weekly which is usually a good indicator of market sentiment. All the indexes are above their EMA 200 on the daily charts which is also a good sign. Now we just need to see some further confirmation of strength and things could be looking good for the months ahead.

The VIX is still traveling lower and in a low volatile manner. Gold still is moving lower further confirming the move of funds under cheap borrowing circumstances. Possibly the Fed's hint that rate cuts may be over could be prompting investors to get in at a possible rate low. Oil has also continued it's decline yet I'm not entirely convinced this is a turn of trend. We are yet to see a break of the recent uptrend so things are still up in the air.

The USD is now gaining some strength which could also be due to the Fed hint at rate lows. Possibly investors are not willing to bank on a decrease in the USD value from here. It does appear as though we are seeing some stability coming into the equities market right now which may set us up for a decent run. We may not see a good booming market in the next 12 months but it does appear to be a good sign for the bulls.

My Focus

I'm going to continue to be cautious this week in response to my trading results. I'm not going to push for trades whilst I'm not on top of my game. I will continue to trade but only on the most solid ideas that present themselves. I am continuing my focus on the 5 and 2 minute charts and placing a big emphasis on the Tick. Lately the Tick has been tipping the hand of the market before decent moves so I need to keep a close eye on it.

My journal entries are working well for me and I will continue to record orders that I put in and then remove. My trade management is working well for me right now and has been the saving grace for me this week in reducing what could have been substantial losses. I will keep it the same as well as the risk and money management.

I am meant to be going away on holiday next week but I'm not sure whether I will be able to with my ankle. So this could be my last setup and focus until the 15th or so of May. I will see how it goes and note whether or not I will be here for trading.

 

[jasont]

Trading For 2nd May

Here is my journal for the 2nd May:

Today we had the employment figures come out at 8.30am and it appears as though the market has looked favorably upon them. After market action was pretty flat until the release of those numbers in which the market rose 10 points.It looks as though we will have a ten point gap to the upside. Possibly further building upon yesterdays move.

9:38 we had a big gap up at the open and since have moved down quite swiftly. The Tick was showing optimism from the stocks at the open so it may be a sign of things to come. Still a touch early to make a good assesment so I'll sit on the sidelines until some solid signals appear.

9:50 We have found some support at 1417 currently as the Tick remains pretty stubborn staying above the zero line. It will be intersting to see the strength of this upward bounce as it will hopefully tip the market's current sentiment.

10:05 The market has remained pretty strong from the looks of the Tick though we are yet to see a higher high on the day. I am tempted to test the short side right now but don't want to test any short moves with the way this Tick appears to be favoring the buyers. Will wait for the pullback and see what happens. If we can press past the opening highs we could see a nice trend present itself.

10:16 It is interesting that again where I was looking to trade would have been a touch too early. Something to keep in mind. Ok so we have broken through the SMA on the 2 minute chart but only barely. The tick still looks strong though we have fallen just short of the day's highs and turned. I just entered a long trade at 1420.25 for the bounce from the zero line on the Tick. I initially had my profit target at 1421 and we came up as high as 1420.75 but then fell back. I got the feeling I may have been in a bit too early again so I got out at breakeven. The Tick still looks like we could bounce from here but things just weren't looking right.

10:28 And my trade management saves my ass again. Appears my initial idea to short was a much better idea than my one to go long. We have moved pretty hard down since the slight pause we had that I mistook for a possible bounce.

10:31 Just as I was making my above comment I realised we were still rejecting the area below the zero line on the Tick and were hitting an EMA just below the days previous low. I saw an opportunity for a long trade at 1416.50 with a profit target at 1417.50. My stop was at 1414.50. The market picked up some strength and hit my profit target after a couple of minutes. I'm not sure how big the move up will be hence the small profit target. This recent move down has looked pretty intense.

10:40 I am actually going to call it a night. I want to end the week on a high point and I need to be up early tomorrow morning for my ankle appointment. Considering I am most likely going on holidays I would much rather leave knowing I had a good last trade. That way I won't thin as much about my trading when I should be enjoying the time off. People may say it's not good for my trading to leave the market so early but I believe I needed the psychological shove this week as it has been tough for my trading.

Daily Wrap Up

This is probably going to turn into a weekly and then trading to date wrap up but I'll just type and see where it goes.

I can find no other way to describe my trading today apart from fortunate. I traded twice against the dominating trend and managed to come out ahead. I thought the trade ideas were valid but things were pointing to a downward moving market and I knew it. Again my trade management saved me on my first trade which was in hope of a rise but instead we saw a mere pause in the downtrend. The second trade was the first well timed entry I made all week but again was at the bottom of a pause in a down trending market.

Ending the day on a good trade was something I needed to do psychologically. This week has been a difficult week in terms of trading the market. Two weeks ago I had a rough week but it wasn't caused by the market it was a number of things rolled in together. I found this week to be choppy but in small waves. I don't mind trading a choppy market but I have a difficult time when the chop is only a couple points at a time.

So the week turned out to be a loss by cause of brokerage which I am extremely happy with. Considering the conditions of the market and my difficulty in trading it, I managed to weather the storm and tone down my trading. It was hard for me to find solid opportunities and I am glad it didn't prompt me to over trade. I had always heard long time traders say that when they aren't at their best, they reduce their risk and trade volume until they recognize they are back on their game. I am proud to say I took their advice on board this week and it minimized what could have been a disaster week.

Before I go on holidays I want to assess my current trading up until this point. When I first began trading with my capital I had taken a big hit in the first week of roughly 10%. It was a good learning experience and prompted me to tone things down and work on developing consistency and comfort in live trading the futures. The funny thing is, I thought that since I had traded live in a different market that I would easily switch across and not get any feelings towards trading live in futures. The first week showed me otherwise and it was time to get back to the drawing board and work from scratch.

From that first week I began stabilizing my trading and lowered my risk. I worked on getting back to the things I focused on during my simulation trading that worked so well. The next six weeks saw my account stabilize around break even whilst I got used to getting in and out of positions with the capital on the line. Once I realized it wasn't threatening to be in a trade I was able to make the trades about the market and not the money.

After the six weeks of stabilization I have now enjoyed 7 weeks of slow growth. Although it's not massive growth indicated by my account value, I do consider it massive growth on a personal level in regards to my trading. It has only been in the past 8 months or so that I have realized the importance of consistency in the market. Not necessarily consistency in the account but consistency in how trades are made and managed. With enough trades under my belt I can assess how things can be tweaked and improved which this journal has helped me achieve. Especially with the help and support of those who posted public and private messages.

When I get back from my holiday I am hoping to be refreshed and no doubt having trading withdrawals. I will need to take it easy to get back into the flow but after that the aim will be to implement the two lot system when I am comfortable. The two lot system will take a fair bit of hard work to get going again and will be a slow process. I look forward to the challenge and the development it will bring. I will be back here roughly on the 15th May and hope that I can get back the weeks of lost support and resistance zones I will miss. Good trading to all until then.

Trade 1: Breakeven
Trade 2: 1.0 Win

Daily Result: 1.0 Gain

 

[rathcoole_exile]

Jay,
enjoy your hols, come back fresh and fighting fit. i look forward to resuming you thread when you get back.

r_e

 

[LiggerPig]

Great work on your blog Jay, it's the closest I've seen to what I try to do with my own blog at another place. I hope to use some of your ideas to improve my trading. I'll need to the 15th to read through your posts, have a fantastic holiday and in those quiet moments think about how you will train yourself to enhance your performance. Good Luck

 

[jasont]

Back To Work

Ok well I'm back after a great holiday. I tend to think you are doing what you love when you are on holidays but can't wait to get back to work. Not to say I didn't enjoy the time away, I just enjoy the markets.

I want to say thank you to Firewalker and LiggerPig for your well wishes on my time away . LiggerPig please let me know where your journal is so I can read and get some insights myself.

I have always found holidays to be a good time to reflect on things and to address any elements in anything that can be improved. I took my Market Wizards book with me on holidays and read it for the second time. If anyone has not read this before, it is a great book and a lot can be learnt from it. The first time I read it I had not traded futures so this time was goo because I understood more about my trading from some of the guys in it who do trade futures.

I was actually pretty happy when I found the same core principles across many different traders was the same track I am on. Many things such as risking little and chipping away, being individual in trading, working at it each day with preparation etc. The only thing that I found I wasn't doing that is bothering me a little is letting profitable trades run. The good thing is that I have a plan for it but it's one I am not implementing until my two lot system comes into play.

So overall I was able to do some good thinking about what these successful traders were doing and assess how close I am to following the same concepts. The letting of profitable trades will come in time.

Another book I am currently reading is Zen and the Art of Poker which is recommended by Db Phoenix. I found his recommendation on this great thread here at Traders Laboratory. Some people may remember a discussion in this thread about emotions in trading and what is in Db's thread is what I was poorly trying to articulate. The way I explained things was no where near as good as what Db has done in this thread and I think it is worth having a read.

So being mid way through the book, I have found it has many great principles. If you think of trading when Larry W. Phillips talks about Poker you have a great reference for the state you want to be in whilst trading. I found many of the concepts I am already using in my trading but others I found to be a great addition to my arsenal when I get back in the game.

What did I discover about my trading whilst I was away? I think the biggest realization was that I was on the right track. At times I feel a little impatient to make things happen sooner but I know the path of chipping away slowly is the better path for me to take. It helped having that cemented by the traders in Market Wizards.

I understand that I am not going to make big gains in my trading until I implement my two lot system yet I need to be cautious not to implement that too soon. I have a pretty good track record thus far with scalping but that is not where the meat of my trading profits will lie. Now is the time that I am making sure the entries are on the right path and the scalping is working, from there I can look at making the most of bigger sized moves that result from the scalps.

From here I'm just going to get back in the game nice and easy to see if I'm rusty. From there I can assess my trading and look at things which need to be improved. It's good to be back.

 

[jasont]

Trade Setup For May 15th

It was quite a job looking back through the last 8 or so days of trading I missed. Thankfully we didn't really go too far. So here are the zones I am watching for the 15th of May:

Resistance

1414.50-1415.25
1420.75-1421.50
1423.50-1424

Support

1407.75-1407.25
1402.25-1401.50
1397.25-1396.50
1384.25-1383.75

My Outlook

It has been an interesting period I have missed. We have broken out of the early year range on the DJIA and SP and now tested it. We have seen the NDX continue its bullish run and it looks quite healthy. Even though we had the appearance of a rejection yesterday, I'm not sure the market is ready to make a strong downward move right now. The NYA is holding its own above the weekly 50 EMA and a lot of the volatility has been removed from the market lately. Quiet before the storm or a sign of quieter times to come?

The VIX has made a dramatic move lower which signals less volatility and less enthusiasm to collect put options. The contrarian view is to expect a bounce soon but I'm not willing to put bets on that. Gold and Oil have continued their divergence which is still quite odd. I get the feeling that these two may be the hand that is tipped by the market before we see something substantial happen. Oil seems to be soaring higher due to low supply reports and low USD value. The USD appears to be building some strength which is also being seen by the selling of Gold.

To me the US economy appears to be getting healthier, at least in comparison to where it was a year ago. Interest rates are low and it's hard to get them much lower (I've never heard of negative rates). Obviously an ideal time for investors to start building up debts in the US. Right now the word inflation is being thrown around the world almost as the latest craze. Yet the weird thing is that costs seem to be only going up for essential items, food and energy. I am yet to see good signs of luxury items increasing in price, in fact many of them are decreasing, TV's, Cars, Appliances, Phones, PC's.

So what does that tell me? I'm not sure exactly. For the moment whilst the DJIA and SP are sitting on the top of this recent range I am going to remain neutral until we see a good push above or a sinking back below. I am steering towards growth right now due to the indicators but it's not a strong idea.

My Focus

I'm going to keep my focus pretty low key today. I'm not wanting to rush back into trading and I like to have a grasp on the general feel before committing. I'm not going to say I can't trade but I would like to just enjoy the market action and get back into the flow. I'll watch the 5 and 2 minute charts as well as the Tick chart to see how things are moving.

The journal is still going to be up and running the same as before with 10 minute intervals the least amount of time inbetween. I am going to stay away from trading focus for tonight because I'm not sure how I'm feeling just yet and want to make sure there is no pressure to get in. Pretty much anything that seems like effort in placing the trades. I'm just looking forward to getting back in the game after my break.

 

[firewalker99]

jasont, Do you look at the overnight action to determine s/r levels?

 

[jasont]

I usually take a look at the overnight action to see how it has been moving to gauge sentiment. If something stands out I make a mental note of it but I generally don't place too much emphasis on those levels. My personal thoughts are that the smaller orders being made during after hours are more likely to be blown through by the bigger traders during market hours.

 

[jasont]

FW do you mind me asking your thoughts on using overnight action to help determine s/r levels?

 

[firewalker99]

FW do you mind me asking your thoughts on using overnight action to help determine s/r levels?

Well I was looking at the overnight action on the ES, and on the 13th it spiked up to above 1410. This, in itself doesn't mean much, because it's only a spike. But taking the other days into consideration I would consider support slightly higher than your levels.

However, it turned out you were right. May I ask if you define s/r levels just on eyesight are using the volume by price?

In the past I used to ignore the overnight, but I found that many times (especially in the first hour after the open) it can react to these levels if enough "sideways" action took place, even if it was on thin volume.

 

[LiggerPig]

hi Jay,
My take on overnight s/r is to look for either a 3-5 point move away from the 4.15pm close for running stops which may help indicate the following day's direction (opposite to the stop hunt) or I look to see how the market reacts to s/r levels.
Re your s/r levels, some seem very close, bunched? Is that suggestive of a heavily traded area?
My s/r levels are 1421-26 (wide range for me because I've not seen consistency around highs from early May), 1435-40 (again wide range due to lack of market input), 1460 and then 1415, 1407, 1397-99 and 1388-90
To reach mine I look at important turns then price by volume 'holes', i.e. I adjust for low volume areas. Once I set my levels I rarely adjust them very much except at contract rollover (when it gets very confusing LOL). I rarely post mine because they're stuck in my head!!
Unsusre if I'm allowed to post links to other sites but if you search "LiggerPig blogspot" I'm sure you'll find my page! Apologies if it's hard to follow, I just write as I go along, hehehe

 

[jasont]

FW, I use quite a few things to get my s/r levels. I keep a record of all the high volume price areas, I have pivots, Fibonacci lines, EMA's and areas where people are stuck in orders. The majority of weight in my s/r levels is given to the areas where people are stuck holding positions. I first look for those areas and then find other things to support them.

The more things that line up on an area usually becomes more important. I also work from a most recent time frame back to the earliest time frame. If we pass through the area a few times the area becomes no longer valid to me.

I too have found that significant sideways areas in the overnight market can make good s/r levels. They usually tend to be the ones I make a mental note of but don't mark them down as solid zones. Just something for me to watch for a reaction near.

The spike on the 13th was passed through a bit on the 14th, do you still keep your zones if they have been broken through a few times?

LiggerPig, that is an interesting observation on the 4-5 point move to run stops after the close. It is something I will look for and see how it relates with the market, thankyou for that. I also tend to see if s/r levels are in play during overnight hours and recently have found the market open at one as it couldn't break through overnight.

You're right about some of my areas being bunched and it is also something FW has mentioned to me in the past. I have recognized this as something which needs to be changed and I am trying my best to make them 5 or so points away at a minimum. Yesterday I had most of my s/r levels this distance away except for the last resistance area which I like to place at the day's high.

I also tend to find mine by price areas that would leave traders stuck in a long or short position if they haven't put in stop orders. As crazy as it sounds to me, quite a few traders don't like the idea of having their stop order in the market. I always thought the stop orders were only entered in when the price actually traded.

With the volume by price, I seem to look for the opposite area in regards to volume. Whilst you look for the holes I tend to look for the peaks. I'm not saying one is better than the other as both are valuable. The holes are good because to move beyond them takes a lot of trading because the traffic behind them is thick. I use the peaks because I figure if the market gets beyond there, it usually indicates to me a strong move.

Thanks for your great post LiggerPig, I'll have a look for your blog and check it out.

 

[jasont]

Trading for 15th May

Here is th journal for the 15th May:

So far in the after market action we have seen a small rise. It appears as though we will open with a small gap up. There is a few important pieces of information being released today, the one I will be watching is the Philadelphia Fed Manufacturing Index at 10am. I am already feeling a bit tired as I haven't fully recovered from the time difference of my holiday. I may not last very long but I will try my best.

9:37 The market opened with a slight gain and moved lower almost imediately. We hit the 1407 support area and foudn a bit of footing. The Tick is showing the stocks opening with a negative tone which tells me things aren't exactly rosy but it's very early. Will have to see how the market pans out into the 10am Manufacturing figures.

9:53 So far we really haven't moved far. The YM and NQ have both made new highs for the day but the ES is yet to follow. We have moved towards buying with the equities. It will be interesting to see if it's short lived or continues on for the morning. Right now nothing seems to be concrete, possibly after the news at 10am we will see some direction.

10:03 We had the 10am news release and it created a quick buy up followed by an equal sell off. The Tick shows some indecision by the market with the release. Will have to see what develops from here.

10:16 We have come down and hit the 1407 area again. Usually when something is tested this much it is only a matter of time before it is broken. The Tick isn't convincing for any side right now and is showing a bit of an increase in volatility. The YM and NQ are looking in better shape than the ES right now. I'm too tired to place any trades with a clear mind so today is most likely going to be left for watching and learning.

10:35 Things on the Tick appear to me as though they may be topping out. We are having trouble making good on the new high for the day as we are hitting the slow EMA. This could just be signs of the slow market but the oompf just doesn't seem to be behind the buyers right now.

10:54 I'm not sure whether I was wrong on that thought of the market topping out or just too early. Things haven't really improved with the Tick on the positive side for stocks. We still seem to be struggling to move higher but I may be mistaking that for a slow market. Right now I can't figure out which one it is. We haven't really moved far for the day so far which makes it difficult to see strong patterns. I'm guessing even if I wasn't tired I probably wouldn't be making many trades.

11:08 Well talk about rusty. We have seen a further push higher again which doesn't appear convincing though right now I'm willing to eat my words. It has been quite a slow market which is pretty ordinary to watch. The YM has been having difficulty making a decent move higher but the NQ looks on par with the ES. Something still tells me we look ready to drop rather substantially. I just can't seem to shake that idea of the market right now. For some reason it just doesn't look right for an uptrend.

11:18 A plus in the right idea column but a minus in the timing column. It appears that I am waiting for some moves much earlier than they appear to be happening. We have seen a decent decline for today's type of market but I was about 40 minutes early on the idea. Something that I will need to work on.The Tick has moved into negative territory but it could be only temporarily. Things appear quite mixed at the moment. We have bounced from the support and resistance areas so far. Ranging and choppy markets are when I need to place more emphasis on the S&R zones.

11:24 I'm calling it a night. Hopefully I am more refreshed for tomorrows trading. It was good just to spend the day watching the market and getting back into the rhythm. I sure have missed the battle of buyers and sellers.

Daily Wrap Up

It was good to be back although it was a bit unfortunate that I was so tired. I found myself being a little too critical of my market analysis which I tend to do occasionally. I can't expect too much of myself when I have been away from the market for nearly two weeks. I was happy I recognized my mental state wasn't up to the challenge of trading and kept the day as one for watching.

I have noticed I tend to be a bit early on my ideas lately. I guess anyone can say the market is going to come down and an hour later the market comes down and they say see, I told you so. I'm not an advocate of those type of market predictions and can only go on my analysis and instincts. Quite often I have found the market preparing for a move lower and I find myself in a trade substantially earlier than I should. To me thats a losing trade idea and I'm not going pretend it was right to inflate the ego.

Some work needs to be done on the timing and the answer may be seen in the order bar. I have noticed lately that the market looks to be topping or bottoming in the short term but still has plenty of legitimate orders stacked in the bids and asks. Possibly waiting to see the orders stacked only on one side would be the way to better time the entry. Something to assess.

For following my focus I am giving myself an 'A' for sticking with the easy return approach. I was wanting to get the market feel and I stuck to my focus on that. It is always tempting to come back to trading after being away and placing a heap of orders to make up for the lost time but I took a safer approach. I kept my focus on the charts and the journal. I put the actual trading in the back seat and worked on finding my rhythm again. Something which I may need some time for.

 

[jasont]

Trade Setup For 16th May

Here are the zones I'm watching for the 16th May:

Resistance

1425-1425.50

Support

1420.75-1420
1415.25-1414.50
1407.75-1407.25
1402.25-1401.50

My Outlook

The move higher is evidence of a possible bounce from the recent range highs. If that's the case it could be a sign of good upward movement to come. It is a healthy uptrend we are seeing which is roughly traveling at a 45 degree angle which commonly indicates a decent trend.

There isn't much more to say about the VIX as it has just been continuing its downtrend. Gold has flattened off a bit but Oil is still looking ok up at its highs. Gold appears to be hesitating above the EMA 200 on the daily chart which is usually my indicator of strong or weak on a chart. The USD is still stabilizing and there isn't much more to say about it from yesterday.

Nothing too much has changed from yesterday except for the bounce with the DJIA and SP. For that reason it gives me a slight bullish bias. Things seem to be looking good for the equities right now but as usual it can change very quickly. As always I am staying open to all possibilities.

My Focus

I'm going to keep my focus similar to yesterday. I want to stay relatively easy at the moment without any urgency to place trades. I will not deter myself should a good opportunity arise but I'm certainly not looking hard for a trade right now. I am more driven towards getting back into the flow and seeing the sentiment we are currently holding.

I'm going to keep watching the 5 and 2 minute charts as well as the Tick charts to gauge sentiment. I am going to put some emphasis on the order bar and make notes in my journal about them. I think the order bar might help me better time my trade ideas as of late they have been a touch too early. Journal entries will keep the same time frame. Again I won't put much emphasis on my trade focus as I want to keep it mainly watching and learning focused.

 

[firewalker99]

FW, I use quite a few things to get my s/r levels. I keep a record of all the high volume price areas, I have pivots, Fibonacci lines, EMA's and areas where people are stuck in orders. The majority of weight in my s/r levels is given to the areas where people are stuck holding positions. I first look for those areas and then find other things to support them.

Hmm, I wasn't aware you used so many different elements. I don't use EMA nor pivots nor Fibonacci lines, yet seem to come up with the same levels... although sometimes, like yesterday you were spot on with 1407-1407.75 while I extended this area to potentially 1410 which had me looking for a short, instead of a long

The spike on the 13th was passed through a bit on the 14th, do you still keep your zones if they have been broken through a few times?

Depends how long ago and how many times they've been broken. I can't think of an example straight away, but sometimes several days later price finds support again there. If I have the number in the back of my head or written down, it least I'll know the potential of it.

With the volume by price, I seem to look for the opposite area in regards to volume. Whilst you look for the holes I tend to look for the peaks. I'm not saying one is better than the other as both are valuable. The holes are good because to move beyond them takes a lot of trading because the traffic behind them is thick. I use the peaks because I figure if the market gets beyond there, it usually indicates to me a strong move.

I don't really do it much differently than you I think. I just take note of thinly traded areas to see where potential "run-off" areas could be found.

Good trading!

 

[LiggerPig]

I am going to put some emphasis on the order bar and make notes in my journal about them. I think the order bar might help me better time my trade ideas as of late they have been a touch too early

Hi Jay,
Your style of trading lends itself well to making good use of the order bar IMO. I don't want to upset your methods, just throw in an idea. Maybe in your order bar notes you can comment on the TICK? My thinking being one will enhance your reading of the other.

I'm in awe of you guys who can read sentiment on the smallest of timescales, I've tried many times to read through market action which only frustrates me and comes across as noise.

Your apprehension towards trading after a break is something I share. I had six holidays last summer/autumn (your winter/spring LOL) and the same fear was there each time I returned. It helped me to take a few hours, as you did, to get back into the groove.
That said, it's always a good feeling (of relief) when you find yourself straight back in the zone much sooner than you expected. People don't change, the market still behaves as it did before you went away, just at different price levels.
Tiredness, however, is more detrimental to a trader in my experience. If you're tired you can feel out of the zone all day long, missing set-ups and not sticking to your rules.

Keep up the good work, it's great to watch your progress.