Trade Blog
Finally….the 1017.75 to 1016.00 breakout zone I have been tracking was tested Thursday
In the early morning just before the US cash session open, the sellers took control of the order flow to start a price run to the 1017.75 to 1016.00 breakout zone. Price traded through the breakout zone for some minimal range extension to a low in the ES of 1014.75. Now that price had tested near term support, it was all strong program trading into the close fueled by very active equities BUY programs.
A day in the range with buyers unable to make new highs today
The after hours session last night was uneventful, and after an initial rally out of the US cash session the rest of the trade day was also uneventful. We traded with the current upper range of price with no retest of the current high at 1038.00 level. The ES was still unable to test the breakout zone today of the 1017.75 to 1016.00 levels. With the market trading in a congested range most of the day, I would not at all be surprised to see some range extension tomorrow so here is my call;
80% probability we range extend below the 1016.00 level and 20% we range extend above the 1038.00 level…..this is my call and I will hang my hat on it! 
Trader’s Blues
Losing in trading can bring out other-worldly anger and frustration. Anyone who has taken a huge loss can identify in some small way, if only for a moment, with the despairing jumpers of the 1929 crash. All the cliches come into stark focus as you stare blankly at your P&L: pride before the fall, putting all your eggs in one basket, look before you leap, shoulda-coulda-woulda, etc. Losses have a way of humbling you and pointing you to self-reflection, critical inspection or just plain dejection.
They also can push some of us to a scotch bottle, fine cigar, and great music; especially music made by people who have earned the songs they have written; those blues musicians whose pain drips from every note. You can tell they’ve been there at the bottom of the barrel and climbed back up to talk about it. They have a way of reaching out and connecting with us, reassuring us there is life beyond ourselves and our problems.
We sometimes need that assurance we’re not alone in our experience. That there’s not something fundamentally wrong with us. That our losses in trading represent, in microcosm, the inescapable human condition: a denial of hopes, a thwarting of desires, and a final end, at least on the physical plane of this planet.
Even the wise trader (who if you are not, you should become) who has a sound money management plan in place so he won’t be destroyed by any one event, still has the sting of not getting every trade just right or having events overtake them outside of their control.
That being said, I was digging around in an old trading computer today and re-discovered a musical gem that brought a smile to my face so I posted it for you below. It’s short, only a minute long. It’s not BB King, or Robert Johnson, or Stevie Ray Vaughn, but it captures to zeitgeist of the modern trader. It’s dedicated to anyone who’s ever been underwater, far from the shore.:-)
Trader’s Blues – by Mike Shannon.
Cheers!
Fulcrum Focus
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
The S&P500 Emini makes back some ground as sellers look for price improvement
Buyers worked the market higher after the US cash session open to the area of price just under near term resistance levels. Around 10:50 a.m. central time, the BUY program action in equities started a swift SHORT covering rally for the ES. Sellers moved aside allowing for price improvement as the final ES momentum for today’s rally put in a 998.75 high of day trade. A slow to develop sell response did pullback price off the highs to the 991.50 level, which was met with buyers again ready to close out the day in charge. The final end of day buyers charge ran the ES back up to the 997′s to close out the day session on strength. Now we will see if the after hours session attracts sellers again to take advantage of the end of day price improvement. You never know what the low volume after hours session attracts!
The ES trades up to the 989′s as the resistance at that level holds
Tuesday was a bit slow with price eventually trading to the 989′s resistance level I was tracking. Price rotated at that level numerous times with no breakout to higher pricing levels as buyers remained weak. I did mention going into yesterday’s close in our Daily Alerts chat that sellers, with the higher prices offered at the 989′s area, may work the after hours session again to drive prices lower. So let’s see what happened…..
