Trading Wide Ranges...
...Room to make a big mistake
Technical Edge —
NYSE Breadth: 61% Upside Volume
Advance/Decline: 62% Advance
VIX: ~$19
I’m not to lie to you: I struggled with yesterday’s price action.
It wasn’t due to lack of preparation — as you noticed the ES did exactly what we wanted it to. It pulled back to the 10-ema and reclaimed the prior day’s low. That left traders with 6-points of risk and over 80 points in eventual upside.
Here’s the thing, though.
Even when you have the right levels drawn and the proper prep work in place, you still have to execute, which is where I came up short yesterday.
Hesitating (both on entries and exits) was not something that would work yesterday, given how wide the ranges were and how fast the tape was moving. It was one of those days where you just feel off and while my account didn’t pay a big price — I was actually up slightly for the day — the “should have had” thoughts creep in and turn into frustration.
So many traders talk about tamping down and reducing or trying to eliminate emotions. I think to a degree, that’s right. But we are humans; we have emotions. We are happy when things go right and we are prone to frustration when it goes wrong.
I don’t think it’s as much about eliminating those emotions as it is about controlling them. I wasn’t frustrated with yesterday’s losses — they are a part of the business — but instead by the positions we should have had at good prices based on our work ahead of the open.
That said, we log it. We learn from it. We try to get better today.
So if you made a killing yesterday, congrats! It was a beautiful range to trade and if you applied your work, you could do quite well. If you didn’t make bank yesterday, that’s okay too. Try to learn from it. Take the emotions and “go to the root” — why are you feeling that way?
This is a long, long game. One that technically has no end date. But it has moments in it that you can learn from if you try to. So try to.
S&P 500 — ES
Clearly 4175 remains significant to the ES, which is down about 20 handles with an hour before the open.
If it can clear 4175, the 4188 to 4194 zone is in play (Friday and Tuesday’s high, respectively), followed by last week’s high near 4208.
Bulls do not want to see 4175 cement itself as resistance and to give up yesterday’s gains. If it does, here are the downside levels we’re watching:
The first level I’m watching is the 10-ema on the 4-hour chart near 4150 (right). However, the bigger level that has my attention is 4130 to 4135 (left).
That was a prior resistance level before yesterday’s late-day rally and it’s the 61.8% retracement of Tuesday’s range.
SPY
At some point, they will stop buying the dips, but if it’s not today, look for bulls to step in on this opening dip.
Specifically, I am watching the 10-ema on the 30-min chart, and the 50% retracement + 10-ema on the 1-hour chart. This applies for both SPY and SPX.
TSLA
TSLA keeps bumping its head on $200, but failing to gain traction through. It’s looking a bit more tired, up in 12 of the last 13.
Let’s see if we can’t get a pullback to active support at the 10-day ema. I’d love to see that dip today and get some Feb. calls as a way to play a rebound while limiting our risk.
Open Positions
Numbered are the trades that are open.
Bold are the trades with recent updates.
Italics show means the trade is closed.
(Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
From this latest round, that includes TLT, DE, FSLR and NKE.
None at this time!
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
AQUA
AEHR
GE
NVDA, TSLA, SHOP
SBUX
MELI
NFLX
WYNN, LVS
AXP
BA & Airlines — AAL, DAL, UAL
TJX, ULTA, NKE
CAT
HCCI
XLE — XOM, CVX, COP, BP, EOG, PXD — (Weekly Charts)
Economic Calendar
