Archive for August, 2009
1038.00 new ES high as the resting SHORT inventory builds!
Even though the S&P500 Emini traded to a new high of 1038.00 early in the cash session, the resting held SHORT inventory position did grow today. Sellers used a lower high rally to the 1035.75 level today to add additional inventory to the resting held SHORT position. After the lower high was formed, the ES traded most of the day grinding lower to a low so far in the after hour session this evening of the 1022.25 level. I will be watching again in tonight’s after hour session for any trading down to the 1017.75 to 1016.00 level to see what any remaining breakout buyers do with their last held minimal LONG inventory.
S&P500 Emini trades to new highs of 1035.00
The market traded to new highs in the Sunday evening globex session and then continued with strength into Monday’s cash session for a high of day at the 1035.00 level. During the trade day we had an excellent “inventory grab” SHORT trade set up as the ES traded the 1034.50/1034.75 tick levels so take a look….
One Delta Zone goes neutral and then a second Delta Zone forms at new market highs
The S&P500 Emini started the price rally to new highs today with buyers active just a few hours before the EU markets opened Friday. Thursday the ES rally continued to the 1007.75 level just prior to the close, followed by the initial period of the after hours session controlled by sellers driving price to the 996/997 levels. Buyers enticed by this pullback off Thursday’s 1007.75 high, controlled the order flow in the 996/997 level to initiate a rally. Buying conviction in the ES remained strong through the EU open and all through the US pre-market hours. By the ring of the opening bell we already had the ES ticking price levels within the Delta Zone of resistance 1013.00 to 1016.00 zone of price. This return of price all the way back to the previously formed Delta Zone of resistance put sellers into defensive action, now watch how they handled it….
The ES makes a run to the 1005/1006 resistance zone I was tracking and completes the “inventory grab”
Buyers worked the ES all day as equities held strong with BUY program activity. Buyers looking for a perfect exit to take some profits found that level as price traded into the 1005/1006 zone of price. The buy push into resting SHORT inventory late in the day created the perfect inventory grab exit. Sellers closed the day by stepping into the void left after the inventory grab was completed.
What am I not seeing?
My one-time mentor Keith Cunningham has run numerous businesses and has partnered with and shared the stage with some well known coaches and trainers in the public eye, people such as Robert Kiyosaki, Anthony Robbins, and Donald Trump, among others. Keith knew Robert Kiyosaki personally, well before his success with the Rich Dad/Poor Dad series, and has taught at Tony Robbins’ Financial Mastery events several times. Keith’s as sharp as they come, with a keen eye for B.S. in business and in people’s thought processes. It’s one of the hard-won life skills that make him such a great coach.
Here’s the point.
Even with that superior business acumen, he still has posted above his computer screen the question he asks himself everyday which is: “What am I not seeing?”
It’s a question all serious market participants should ask themselves.
There’s a misconception in the trading community-at-large that “cracking the trading nut” requires a huge mental expenditure, akin to earning a PhD. in electrical engineering, or that one must experience an exquisite, spiritual satori experience and see a vision before achieving success in trading. Some trading novitiates act as though there is a reward for being King Sisyphus, continually rolling their trading angst and baggage uphill only to watch it roll back down to the bottom of the hill.
To begin, I am fully aware of the exceptions to the rule. I understand and have lived in the trenches long enough to experience how excruciatingly challenging trading can be, so I fully comprehend the necessity and usefulness of discipline, mental and emotional well-being, and a daily success ritual of tracking trades and monitoring performance.
That being said, I’d like to pull back the wizard’s curtain for a moment and say that journaling, poring over books on trading psychology and discipline, devoting hours to reading every forum post, back-testing to the millionth degree, mentally kicking oneself over poor performance, doing penance by listening to self-help programs after a big loss can all become ingenious ways of fooling yourself into thinking you’re being productive, or “on the path” to trading success!
Anyone who vigorously leaps to defend these potential “red herrings” should examine themselves carefully to ensure that they are not caught in one of these potentially life-stealing delusions. As Richard Feynman, the Nobel-prize winning physicist, said, “The first principle is that you must not fool yourself, and you are the easiest person to fool.”
Here’s a lesson from history to illustrate:
Did you know the D-Day invasion of France in WWII actually began the night before? The 101st and 82nd Airborne divisions made their combat jumps far inland from the beachhead to cut off German communications and reinforcements and generally cause trouble where they could. It was a time of supreme bravery….and rank cowardice. For not every soldier played the hero that night. Sure, they jumped, but afterward, many hid. One group of them took cowardice to a new level:
“Too many had hunkered down in hedgerows to await the dawn; a few had even gone to sleep. Pvt. Francis Palys of the 506th saw what was perhaps the worst dereliction of duty. He had gathered a squad near Vierville. Hearing ‘all kinds of noise and singing from a distance,’ he and his men sneaked up on a farmhouse. In it was a mixed group from both American divisions. The paratroopers had found liquor in the cellar …and they were drunker than Hillbillies on a Saturday night wingding. Unbelievable.” (D-Day, Stephen Ambrose)
Unbelievable is right. These troopers knew they were at war and they refused to act like it. They lived in a dangerous denial – a denial that not only endangered them, but numerous others who were depending on them to do their part.
So the questions for our self examination: What are we denying? What are we not seeing? Who is depending on us?
Ok…so how do I propose one stay on “the straight and narrow” and avoid such denial??
The first step to success is learning to perceive the market in a way that allows you to make decisions that are profitable and repeatable, and offers you a sufficient number of trading opportunities to make the endeavor worthwhile.
Everything else is ancillary…not unimportant…but every other activity supports this.
Certainly we like to believe we have a superior way of perceiving the markets. It may not be perfect, or the “best” way, but it is demonstrable and easily examined. We invite you to see what we’re about here on our Intro page. Or perhaps join in the chat-room. Watch the daily alerts yourself and judge the efficacy of our approach. Then, as you find value there, you can choose to immerse yourself in the full course. Which is, by design, not a static DVD.
The Delta Volume Analysis course is flexible to ensure we can meet the needs of various learning styles and also to respond to those who would like more in-depth explanations of certain topics such as cumulative delta, delta zones, delta divergences, etc. We’ve already added updates and new lessons to make sure those that have trusted us receive our best efforts in conveying the concepts presented. Whatever you choose….
All the best in life and trading!
Fulcrum Focus
