Jack’s ES Trade Plan for Jan 24, 2014

The last several days of testing the ATH without even touching it convinced me our more likely direction – once we got a direction – was down, so I felt pretty confident getting short at 1843 with a 3.5 point Stop Loss Trigger.  I tried to get filled yesterday at 1842, but we never got that high. However, in the after hours, we popped up and I got filled on my short at 1843. I hit Target 1 of 1833 before 9:pm Mountain Time and Target 2 of 1828 before 9am Mountain Time, so I was basically done for the day. We actually hit 1818, which was my “outside” target, but I was already out of the trade at that point. Before I document my ES Trade Plan for tomorrow, I’m going to review where we are.

Where We Are

We needed to explore a different range. We’d pretty well exhausted the 30s. Now that we’re down in the mid 20s, we need to explore that. The drop to 1814 was extreme if you compare it to yesterday’s close, but was actually a pretty “normal” day if you compare it to today’s open. Frankly, the whole range between 1800 and 1830 is poorly explored. I expect us to spend some time somewhere in there over  the next several days.

The 5D ATR today is 14.25. That will adjust upward in the next few days as long as we don’t put in ridiculously small range days like yesterday. I am still looking for daily ranges between 15-18 points. Until that expectation proves to be consistently wrong, I’m sticking with it.

We have a bit of a split-minded market. Russell was up today, NQ down, Dow down and ES down. That still implies more sideways than directional moves are in our future. The NQ can’t go anywhere without the cooperation of the ES, and vice-versa. That’s less true in regards the Russell and the Dow, but I still pay attention to them for directional confirmation. The fact that the Russell was up all day today told me we weren’t likely to go much past 1818. I missed it by 4 points, but since I was out at that point, I didn’t care.

We established new minor support today at 1814, but it’s halfway between the old major support at 1818 and old minor support at 1809.75, (call it 1810 for brevity.) We also have possible resistance now at today’s close of 1823.50. I am gonna wait and see how those two price levels are treated tomorrow. I don’t trust them yet. If price action tomorrow demonstrates one or both of those prices is going to be honored, I will use them to do business. But until then, I’m on the sideline.

On the other hand, if we get a strong overnight move in either direction, then the old S/R lines are still in play. 1800 is still very solid support under us, and the ATH is still very solid resistance above. Any trade within 15-18 points of either of those lines will be tempting if the trend is in the right direction and the Risk/Reward ratio is at least 3:1. For now, I am waiting for more information.

Conclusion

It’s good that we closed outside the 1830’s, good that we explored the 1810’s and low 20’s. But we have a good deal more price discovery to do to establish the new boundaries of our trading range.  I’ll watch the after hours and update if things change.

Leave a Reply

Your email address will not be published. Required fields are marked *