The FOMC announcement, as expected, was a dud.
Price Action wobbled all day, which made it
very difficult to make an easy living day
trading the e-mini. Even though we scored a
few points, we got lots of SCRATCH practice
as well on Wednesday.
Enjoy and be well,
DAILY PIVOT MAGIC TRADING JOURNAL - EXCERPT
"Don't gamble; take all your savings and buy some
good stock and hold it till it goes up, then sell it.
If it don't go up, don't buy it."
E-mini ES Z1
Wednesday November 02, 2011
1 = Wednesday morning opens gap-up with an Anomaly Double Top (Overnight,
bottom left chart) through the R1. Volume is OK (pink arrow), but not really enough
for an aggressive entry.
2 = Price Action returns for a 123 test of the R1 Support-turned-Resistance.
A = We are pulled in on a large red candle through the High. Initial stop advances
above the High/Free Trade.
We get stopped out two candles later.
NOTE: ABS is somewhat bloated. In order to avoid
getting stopped out on every Price swing, slightly
expand the stop, exit, and Maximum Profit Giveback
3 = A 123 continuation "S" Signal through the R1. Insufficient Volume to enter
B = Volume comes to life (pink arrow), and we are pulled in on a giant white candle.
By the close of the candle, our position goes into MPG violation.
Mental stop at Giveback Level.
C = Large white candle. The elongated top wick retracing 1.25 points suggests
Momentum exhaustion, as does the Late-in-the-Move DVS (pink arrow). Since we
exit at a >2.25 (inflated ABS) point retracement, place a stop 0.75 points below the
close of the candle. There, we get stopped out on the next (red) candle.
Price Action stalls for half an hour and then dribbles back down for a retest of
In light of the upcoming FOMC, pre-FOMC Volume is still rather perky. Guess the
BBs don't really
expect much from the Fed announcement.
X = A very brief, minor swing in response to the FOMC non-statement. Notice that
even the upswing portion is Bear flavored.
4 = The Volume continues strong (pink arrow), so, in spite of the time (lunchtime)
we are intrigued. In light of the obvious trend (green line), and the Bear FOMC
response, we enter aggressively on the 123 portion of this 12345. (This IS
discretionary trading!) At the close of the giant red breakout candle, move the
profit-locking stop to the safety of Free Trade.
D = As the next candle does an S-trap stall, our stop just misses getting hit.
Per our stop rules, at the close of the large red candle through the High, move
the profit-locking stop above the High.
E = Giant red candle plunges almost enough to close the opening gap. Our position
is in MPG violation. Normally, we would follow the MPG rules and move the
profit-locking stop to Giveback Level; however, the gigantic DVS and the elongated
bottom wick both signal Momentum exhaustion. With 1.75 points already recouped
by the bottom wick, place the stop up 0.50 points from the close of the candle.
(REMINDER: A PMT Exit Now! is called for when >2.25 points are recouped.)
Ugggghhhh! We get stopped out in the first minute of the next (white Doji) candle.
5 = As we come to the end of lunchtime, the opening gap gets closed, and Price
Action tapes a strong 2-bar through the Close. Unexpectedly, Volume (pink arrow)
now drops back to lunchtime levels of disinterest. Pass.
6 = Volume is very confused following this odd spike-through reversal, which never
really proves (not counting the neutral Doji, of course).
7 = As the PMT entry clock winds down, the tape presents a 123 through the R1.
Volume is strong, so we enter aggressively. Initial stop under the R1.
We are dismayed by the elongated top wick and fear the worst. In fact, our stop
is nearly triggered as Price Action pauses for a 123 test of the R1
H = Even though the 123 might tempt us to add more contracts, the minimal Volume
associated with the breakout suggests otherwise.
J = Large white candle. Per our stop rules, happily (no rule for happily) move
the profit-locking stop under the low of the candle.
Less happily, we are taken out as the next (red) candle tapes a mid-air Reversal.
The day fades sideways to a close atop the R1.
(Daily, bottom right chart)
Wednesday tapes a small white breather day stalled
above the LT SW Channel Ceiling (lavender channel
Although Bear moves historically don't require much
Volume, this time it looks like it may take a bit of
Volume to re-enter the Channel. Nevertheless, Price
Action is still likely to settle back into the safety
of the LT SW Channel over the next few days.
BE PREPARED FOR ANYTHING, AND GUARD YOUR FUNDS!
REMEMBER: Trade the Tape, Not my Prognostics!
Wednesday's PMT Chart: