Tuesday, January 13, 2009

Choppy Waters

Tuesday was a very choppy sideways market after the morning short ambush that I anticipated near the 873 area. We then fell to the 857 level where we bounced and the rest of the day was just a chop fest. In the latter half of the day it did not surprise me to see the 15min chart of the ES with a flat 20 and 50 period ma. When this happens it is always a good signal to step back and just not trade. Trading when the market is flat is a recipe for stop out after stop out.

The game plan for Wednesday is to keep an eye on the pivot point on the ES. The pivot for Wed. is 866.50. We are trading low 870s as I type overnight and I would expect this pivot to hold in the morning. If we fill any gap at the open then I would like to look for a long at the pivot of 866.50. This is also a long ambush from Tuesday's lows to Wed. overnight high (so far). If we do bounce in the mid 860s area then I would look at the potential for a short covering rally up to 879 before running into some resistance. If we really get going then they may push the market up to the 885 level, where there is a setup for a bit larger ambush short but that may not come into play till Thursday.

We will see what happens in the morning. Trade safe.


MarketAddiction said...

Have you been watching the EMini addict? lol. I was curious if you trade the gap? If so, is there any particular criteria you use for determining if the gap will fill or continue on in the direction of the gap? I was thinking of testing a gap fill strategy to incorporate into my techniques but I can't seem to pinpoint these days very well. I watch the market internals but I can't seem to be able to determine an exact entry.

Jason said...

Nah I dont trade the gap. But i plan on learning sooner or later. He has some great stuff on his site that talks about gap criteria though. He is a good guy and I enjoy his strategies.

MarketAddiction said...

Yeah, I found his strategy interesting and recently subscribed to his blog feeds. I'm not sure if that style would fit me well, but it's interesting enough for me to look into.