Monday, July 06, 2009

Making the Right Call on Day Structure

Here we see an updated Market Delta chart for the ES contract this morning. Note the Twitter comments as we moved to new highs:

8:57 AM CT - TICK quite mixed, but volume at offer > bid in ES; Russell, NASDAQ underperforming; not acting like trending market thus far

9:03 AM CT - ES makes new high for AM, not confirmed by Russell or NASDAQ. 890 more declines than advances

By watching the indexes other than the large cap ES and following the broad market, we could see that the market was not acting as if we were in an upside trend day. Recognizing the mixed strength of the market and making the call re: range bound conditions helped with making the fade trade on those morning ES highs.

Your early task as an active trader is to make the basic call as to whether we're in range or trending market conditions. Much of your morning profitability will hinge on getting that call right.