Shortly after the market open I sold the S&P 500 Index for a move back to the pivot area from the previous two day's trade. Following the logic of my tweets, I saw that intermarket themes were not supporting the upside breakout in stocks on the retail sales news. Knowing that at least 70% of all trading days touch their prior day's pivot made that a natural trade idea.
We did indeed dip below the overnight low and pivot, but at the time that occurred, we could not make a new low in NYSE TICK, and we could not make a morning low in the NQ futures. At that point, I waited for a bit, saw the TICK firm up and stocks bounce, and exited the trade for about 4 S&P points of profit.
The key to making the trade was knowing the target and also knowing key price levels. It was the inability to sustain downside momentum as we got to the overnight lows that alerted me to the possibility that we would stay in the morning range.
Much of the success of a trade, I find, is a function of the preparation--market and mental--that goes into its execution.
For more on execution, check out this post.
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4 comments:
It amazes me the number of people who expect to succeed in one of the hardest professions in the world that refuse to properly prepare for the trading day.
Dr S, did you use a short on SPY, a trade on SH, a trade on SDS, or do you play in the mini-futures world? A 3-point move would require the trading of at least 1000 shares of any ETF to make it worthwhile, and I know NOTHING of e-minis, and I trade inside an IRA account.
Thanks in advance.
Dr K
Dr Brett, when you say 70% of all trading days touch their prior day's pivot - is that more or less likely to happen at a certain time of the day? ie: early trade when these is more volume - or was it purely the rejection of the breakout that drove that decision?
so true, TS, gotta prepare big imo!
Dr. Bill Brett usually trades the ES.
i find premrkt news spikes up to be great times to short. 48 short ES at 1048 this morn gave ya almost 10 pts, yehaw!
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