Wednesday, February 07, 2007

Wednesday, February 7th Morning Market Comments

9:59 AM - OK, done for now. It's been two good AM trading sessions in a row, but none of it would have mattered had I not kept myself from losing money on Monday when trade was narrow and my computer was freezing more than the weather. Can't emphasize enough that issue of keeping losses down. Then you truly benefit when opportunity arises. The other lesson for today pertains to levels. We had a level at the Tuesday midpoint and, when sellers couldn't break below that, it was logical to assume we'd be revisiting the highs. Knowing levels and tendencies makes a big difference, and hopefully this AM provided a small illustration. The latest TICK bounce was pretty anemic, so I'm content to regroup. Have a great rest of the day; update tonite via the Weblog.

9:49 AM - As long as pullbacks in TICK occur at higher price lows, you have to assume the uptrend is intact. It's when you get TICK surges that fail to produce new price highs that you think about taking some off the table. That works well for me.

9:42 AM - Hope you were able to catch that; I saw big traders lifting offers again and sure enough it took us to the R1 level for a nice pop. Back in a while. I'm basically buying TICK pullbacks until the market tells me not to.

9:37 AM - Watch for breakout move

9:31 AM - Took profits here and will reassess for breakout and reentry.

9:15 AM - Targeting a breakout above the AM highs in ER2 and ES. What we were seeing was a drying up of the TICK and some shift toward relative strength and lifting of offers in ER2. I used that as my indication that we might hold at the Tuesday midpoint and at least attempt a retest of highs.

9:12 AM - Tight stops; long and will get longer on TICK pullbacks that stay above the AM lows.

9:04 AM - Watching for possible upward shift in TICK distribution, which would have me buying.

8:51 AM - Volume pretty healthy in ES, with contracts skewed toward hitting of bids. Again, I'd need to see drying up of negative TICK and selling in ER2 before I'd take the long side.

8:48 AM - Inability of buyers to keep market above Tuesday highs and the weakness in NQ excellent tells for the ES move back toward the average trading range.

8:39 AM - Need to see selling dry up in ER2 before I'd be aggressive long; otherwise looking for return to avg price in ES.

8:24 AM CT - I've got several things going on this AM, including phone contacts with traders and trading firms, so that's going to make it tough to post in a very frequent way. Basically I'm going long this AM if selling dries up above 1453.25 in ES and above 813.90 in ER2. Otherwise, I'll be watching for the possibility of a pullback to the midpoint as we had early yesterday. Back after I get some calls made!

8:19 AM CT - Good morning! We're knocking on the door of recent price highs in the preopening market for the three major indices after the productivity news, firmness in Europe, and the rally following yesterday morning's decline. No other major economic releases scheduled. We could have a very solid upside breakout if sellers cannot push the indices back into their Tuesday ranges; I'll be watching those large traders carefully for some clues. Interest rates have come off a bit here; we're also seeing a rise in oil and in energy shares. We've had three consecutive trading sessions in which we've oscillated around an average trading price of 1451-1452 in the ES. This region should be a magnet for prices if we are to stay rangebound; failure of sellers to bring us back to that point would be important for the bulls. Failure to sustain the preopening move above Tuesday's highs would target that average price as an initial, high probability target. Note the article posted a little bit ago on a new form of biofeedback that might aid traders. I'll have more to say on that topic coming up. Back after the open.

4 comments:

Mike Roznowski said...

nice trade, still not sure how you have time to blog and trade at the same time??

Brett Steenbarger, Ph.D. said...

Hi Mike,

At times it's a bit hectic, and at times it's a bit frustrating because I have to make my trades and keep an eye on the order flow before I can go off and blog about them. But because I'm only placing several trades max per AM, I have time to post usually. The key is keeping the screen well organized and having all orders preloaded for quick execution. Thanks for the note!

Brett

Lord Tedders said...

Great analysis of the morning. You could really see the big guys out in force this morning at around 7:00 am and it was quite a ride above the opening highs on the Russell.

It's so true that you need to be able to minimize losses on tough days so you can do well on days like today. I find it interesting though that you found Monday to be a tough day, while I struggled yesterday.

By the way I'm loving your new book, "Enhancing Trader Performance". I'm really getting a lot out of this, thanks.

Edward

Brett Steenbarger, Ph.D. said...

Hi,

Thanks Edward; I appreciate the feedback. It's so important that new traders understand that being successful doesn't mean you're not wrong. It just means you recognize quickly when you're wrong and don't let that put you in a hole!

Brett