Trade Strategy for 5.31.13 “Fight Club”

Successful 3-Day Cycle for the Bulls as they were able to penetrate the key 1653 level yesterday and hold, allowing a rally to the 1660 target.

In Globex trade “da bears” are now pushing price back to key 1640 level for a retest…It’s clearly a battle for dominance as this action reminds us of “Fight Club”. Bulls and Bear exchanging blows but neither have broken.

Today’s levels are familiar for this week…1638 – 40 remains key “line-in-sand” for Bulls. Upper level 1655 is key marker for upside penetration.

Good Trading…David

Habitude Four:
I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.

Trade Strategy for 5.30.13 “Fight for Dominance”

“Da Bears” made another attack yesterday pushing ES down to 1640, which is a critical “line-in-sand” for Bulls. Intra-day retest of that level resulted in a higher low as there were no new sellers, thus trapping shorts, forcing a short-cover rally to prior morning highs. Overnight action again retested 1640 – 42 zone successfully. In early morning trade bulls are staging a rally up to critical 1655 level, which could be the tipping point for shortie.

Today is day 3 of Cycle which is normally bullish. Having held critical zone (1640), bulls have good odds of completing yet another bullish cycle by pushing price above 1655 and holding.

IF price can penetrate above 1653, THEN price projects upwards to 1660 – 65. A violation of 1638 – 40 zone calls into question bulls resolve and tips balance back to bear-case. Anticipate increased variances in opinion which could provide decent volatile trading opportunities.

Good Trading…David

Habitude Three:
I am willing to accept loss. Losing is an integral part of the process. I know and accept that individual losses and losing periods will happen. They are endemic to trading. I do not like loss. I do not expect loss. I simply accept loss as a cost of doing business.

Trade Strategy for 5.29.13 “Da Bears Regain Control”

Bulls attempted to re-establish dominance yesterday with a strong gap up opening, but could not hold the Open Range.  This does not bode well for Longs as “Da Bears” came out of their caves growling. Probabilities favor an retest of 5/23 lows and possible full breakdown if bulls fail to materialize to defend.

Pre-Pit Session has price below Prior Day Low (PDL) which is clearly negative, as well as below 3D CPZ. Momentum has shifted back to bearish and some initial downside targets measure 1633-36 Zone for a pivot retest. Failure to hold this zone would cause long liquidation which could get ugly down to 1619, then 1612’s.

The bullish case calls for holding any selling and reversing up through 1655. The current 3-Day Cycle continues to favor bulls, but unless they can stage a strong reversal, the “change of character” (COC) we discussed last week will gain momentum.

Good Trading…David


Habitude Two:
I am detached from the results. I think in terms of the process and the validity of the process. I understand that I am more than the trading. I do not tie a fragile ego to any day’s trading results. I have faith that over time I will make money. The results of any one trade are statistically unimportant. I think in term of probability. A single trade says nothing about me as a person.

Trade Strategy for 5.28.13 “Shallow Retracement / No Real Sign of Strength”

The recent retracement from the key reversal day last week has only measured approximately 33% and has not shown any signs of renewed bullish strength. Perhaps the long holiday weekend had something to due with that…This week should either reinforce the larger bullish case or the potential character change we mentioned on Friday.

In either case, one side will have to reassert itself to get some directional movement. Narrow holiday trade and an inside day keeps us focused on last two-day range parameters.

Initial supply zone is from 1655 – 58. IF penetrated on upside with momentum, THEN 1661 – 1666 zone is targeted. IF the bear case is valid, THEN a violation of 1645.00 pushes price down to prior pivots located at 1633- 1636 zone.

We will remain flexible to either case and defer to Mr. Market for direction. We want  what the market wants.

Habitude One:
I am ready to trade. My patterns are verified. My homework is complete. My mind is clear. I have rehearsed everything. I am prepared strategically, emotionally, and financially each and every day.

Good Trading…David

Trade Strategy for 5.24.13 “Change of Character?”

Yesterday’s bounce retraced about one-third of recent decline…not very impressive given how strong bulls have been. That said, a retest of 1632-35 zone seems necessary to determine if there is solid footing for further up for bulls or whether there is a definitive “change of character” advantaging the bears.

Today’s supply zone is between 1652 – 55 and demand zone 1632 – 35.

IF 1654 is penetrated THEN price projects up to 1661.00. IF 1634.25 gets violated THEN the decline has potential down to 1621 – 24 zone.

Bears currently have control of the ball, so give them the initial benefit for the first time all year. Pre-Holiday trade may be lighter as today unfolds, so remain focused and disciplined to trade setups.

Good Trading…David

Trade Strategy for 5.23.13 Remaining Flexible on Direction

Our comments past few days has served us well as we remained vigilant for a “sharp reversal”. Shortie having been squeezed out during early Bernanke testimony only to reverse sharply as “Uncle Ben” responded hawkishly to question regarding the Fed’s QE exit strategy. This sent Markets in a “GTFO” tailspin. Over night Japan plunged -7.3% as a confluence of factors forced selling.

Today’s trade strategy simply is to remain flexible and anticipate a somewhat volatile session. Projected downside targets on a break of prior day low (PDH) have already been achieved to 1635.50. The Monthly Pivot is 1634.25 so anticipate a “buy response” from any retest during Pit Session.

Prior Day Low (PDL) is 1646.50, so this should mark first real supply test. Anticipate increased volatility and remain disciplined to trade setups.


Good Trading…David

Some Trading Room posts from today’s “Key Reversal”


Based upon 3-day Bullish Cycle there is potential to reach upper targets measuring 1681.00 – 1685. IF prior day high (PDH) is penetrated THEN that upper target is “in-play”. A failure at PDH would setup an intra-day reversal to retest 1660.00. IF the 1660.00 level is violated,THEN  there is a 48% chance of making a low down to 1649.25.

Actual HOD: 1685.75

Actual LOD: 1646.50


Excerpts from Trading Room  on 5.22.13

[09:50:51 am] Joe Baker: 2 trys to get long 67s
[09:50:56 am] Joe Baker: 69.50s
[09:50:58 am] Joe Baker: NATTA
[09:51:02 am] Joe Baker: ZILCHO

Polaris Trading Group: Will NOT buy unless in fair-value zone

[09:53:06 am] uncle fred: this puppy is gonna teach da  Bears about PAIN

[10:06:17 am] Joe Baker: all targets hit
[10:06:41 am] Polaris Trading Group: this will be the final short flush-out

[10:13:48 am] Polaris Trading Group: Targets HIT!!!!!!!!!!!!!!!!!

[10:17:37 am] Moe Mentum: short 82
[10:17:38 am] Polaris Trading Group: SS 82 10:15

[10:29:16 am] uncle fred: Target REACHED   20   pt  up for  3 days RALLY  UNREAL

[10:33:12 am] Polaris Trading Group: This action not for weak stomaches
[10:33:34 am] Polaris Trading Group: Don’t trade this without supervision
[10:34:25 am] Polaris Trading Group: staying short side
[10:34:47 am] Polaris Trading Group: This is setting up as “Key Reversal Day”

[10:35:24 am] Polaris Trading Group: BOT 78 from 82 SS 10:35

[10:36:58 am] Joe Baker: VXX was KEY again
[10:37:09 am] Joe Baker: Thank you so much

[10:38:12 am] Polaris Trading Group: How do you spell CAPITULATION!!!
[10:38:16 am] Moe Mentum: flat 10 pts

[10:38:35 am] Polaris Trading Group: KEY REVERSAL DAY!!!

[10:43:05 am] Polaris Trading Group: It’s almost like I know what I’m doing!!! LOL

[10:51:54 am] marc baker: capitulation
[10:52:04 am] marc baker: last gasp
[10:52:14 am] marc baker: give us the word
[10:52:21 am] Joe Baker: last engulfing

[11:55:29 am] Moe Mentum: they exceeded ADR of 17 pts this morning.. that was the goal of today

[12:35:04 pm] Polaris Trading Group: longs continue to dump
[12:36:21 pm] Polaris Trading Group: -900 TICKS
[12:36:52 pm] Polaris Trading Group: Russell taking a “header”…nose diving

[12:58:26 pm] Polaris Trading Group: Price has coiled forming a Symmetrical Triangle…Watch for a directional breakout of Compression
[01:00:55 pm] Polaris Trading Group: 78.50 “marker”

[01:30:03 pm] Polaris Trading Group: Price back to Open Range
[01:30:19 pm] Polaris Trading Group: Did anyone say “KEY REVERSAL DAY”?

[01:42:38 pm] Polaris Trading Group: LONG LIQUIDATION
[01:43:00 pm] Polaris Trading Group: NO ONE LEFT TO BUY
[01:43:41 pm] Polaris Trading Group: 1666 BIG TEST MARKER

[03:24:39 pm] uncle fred: PROF  LOOK we got  0’s….VOODOO man VOODOO

Trade Strategy for 5.22.13 Persistence until Resistance!

Key “Line in Sand” for Bulls as stated in Tuesday’s trade strategy was 1659.75…Low of Day (LOD) was 1660.00! Bulls defended that level aggressively during day 2 of 3-day Bullish Cycle.

Persistence until Resistance has been the ongoing theme and continues to be until a reversal signal is given. Top pickers (shorts) have continued to fuel to upside daily. Price has gone “parabolic” which is unsustainable, so we remain vigilant for sharp reversal while trading the long-side.

Based upon 3-day Bullish Cycle there is potential to reach upper targets measuring 1681.00 – 1685. IF prior day high (PDH) is penetrated THEN that upper target is “in-play”. A failure at PDH would setup an intra-day reversal to retest 1660.00. IF the 1660.00 level is violated, THEN  there is a 48% chance of making a low down to 1649.25.

Currently Globex Low stands at 1664.75 which is the midpoint of yesterday’s IB Range. This becomes the initial “key marker” support on any pullback. The 2-day range balance point is 1665.00 – 66…Prior Day Close (PDC).

The bullish side must continue to be respected until a clean reversal is given.

Good Trading…David

Trade Strategy for 5.21.13 Potential H&S Top on 60 min chart

Yesterday’s trade strategy played out nicely as price broke out from Friday’s high propelling it up into the Money Box and upper X-Zone where the reversal began. The average decline anticipated from the high measured between 8 – 12 handles hit squarely near 10 handles…Perfect

The 60 min chart has the look of a Head & Shoulders Pattern forming…Prior Day Low (PDL) marked at 1659.75 will be key “line in sand” for bulls. Break of PDL with momentum projects lower targets 1658.50…1654…1651 – 48 zone. On the upside, if price action regains 1666 and holds, then retest of 1670 handle becomes in-play.

Remain flexible to either scenario…Trade what “is happening”, not your bias…Profits continue to be made by those traders disciplined in their trading methodology.

Good Trading…David


Trade Strategy for 5.20.13 Remaining Vigilant for a Pullback in Averages

Good Morning…Though Markets have had a historic asent, we must remain vigilant for a pullback…Friday’s action may have squeezed some of the most stubborn Bears into covering…If that’s the case, then we must be careful on any downside momentum development, as who will be left to buy…more Bulls? That said…IF prior day high (PDH) does NOT get taken out, there is a 73% chance of a pullback greater than 10 handles with an Average Decline of 12.75 pts which would bring price back to 1657 handle…into the CPZ…IF that does occur and momentum remains strong, THEN the 3D CPZ 1653 – 55 Zone would be targeted….On the flip-side…IF PDH is taken out, THEN upside price projects to 1673 handle…Friday marked the end day of 3 day Cycle, so today actually favors a pullback in the averages….Remain vigilant and flexible….

Good Trading…David