Sunday, August 17, 2008

Which way is the elevator going?

I dont trade the initial balance (1st one hour) of the market. Mainly because my trade plan builds off the IB. I watch it intently for the bias and momentum of the paper that comes in. I laid out the comparison of the 3 day profile and the 30 day profile in my previous post and we looked at two possibilities at edges of the current paradox.

On Friday we went on to test the overnight high and was quickly rejected and the support of the 1291 area held. The market set it self up for a possible balance by the reject in the C period. D and E periods provided excellent trade points to ask the question - is the market doing a great job in the longer time frame trend or is the shorter time frame trend more likely. We had 30K delta ( barely) and the markets were divergent. Russell was well off the highs. The Trin was well of the lows. Nothing was on fire. I mean it just was not the day it was going to bust through the seams and break out.

J& K periods provided yet another opportunity for a reversion to the mean trade. I did manage to make a mistake in the middle of the distribution waiting for the trade, in spite of my plan not to trade the fat part. I got tired of waiting for the market to come down to the edges. I have named them the Amygdala trades or the fear of losing oppurtunity trades. Fortunately the market gave me an exit and I was able to snap out of the trade (at a smaller loss) and catch the edge. Overall the day was a great balance trade day.

The long time frame buyers I mentioned in my first post were noticeably quite!

No comments: