Tuesday, June 02, 2009

Premarket Briefing: Preparing for Range Trade

Here we place the overnight market (60 min. chart of S&P 500 e-mini futures; ES) within the context of the last several day's trade. We broke above the early May highs of 929.50, so we want to see if we can hold above the May range to sustain an upside breakout move.

We're currently trading well into Monday's range, not far off Monday's pivot level. After several strong days, I'm prepared for some consolidation in the form of range trading, with overnight high and low prices serving as initial targets and Monday's high and low prices next on the list.

I find that many of the best trades early in the day come from reading sentiment (Market Delta, TICK) in the opening minutes of trade and then placing trades to hit those initial targets. Since 85% of all days hit either their prior day's high or low and 70% of all days touch their prior day's pivot price, these are nice targets to shoot for when we open inside the previous day's range.

I'll update the target hunt in tweets early in the session (follow here) before I start my work with traders.