Tuesday, September 2, 2008

Double Whammy Tuesday

A complete breakdown of structure from how the morning started. The dominant flows got reversed by the ISM news which showed shrinking factory activity trending towards contraction. Secondly, the hurricane Gustav good news was completely overshadowed by Hana and others that might follow.

The trade opportunities today were- B period short opportunity after the reversal. And a beautiful short opportunity at VWAP. There was another short opportunity at .382 retrace @ 10:40 PST (which I did not take). I just had the VWAP trade as winner. My B period trade got scractched on the pullback. I did take a long at the 85.75 level which got stopped at entry after a 3point scale out. That was the reason for the missed oppurtunity @10:40 pst ( you miss the train when you are riding the wagon).

It was one of those days where the retraces were shallow. Very difficult to read during the IB. Who knew the trade you scratch would be a 30 point winner. The key to the sell off read was what the big money was doing (orderflow) - reversal of dominant flow @ 7:12 pst. More importantly, how the news was received, crude oil and hurricane related news. Of course energy sector, and tech was a drag all day. It was a day if one was not in tune with the news and orderflow, would have had a bullish bias until it was too late.

Multi-time frames involved in the sell off. We have rotated 3/4 of our balance area (short term) in one day. The 63 level retest is just 10 points away.

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