12/7 Post

 Thursday and Friday were rotational days holding Wednesday's prices. The market appears to be accepting these higher prices which is good if you are a seller, but it is also being driven by it's technical up trend and other bullish news factors:

On December 6, 2024, U.S. stock market performance was largely influenced by anticipation of upcoming Federal Reserve decisions and economic data releases. Key factors driving the market included:

1. Federal Reserve Policy Expectations: Investors were focused on the likelihood of a Federal Reserve interest rate cut during the December 18 meeting. Federal Reserve members suggested that inflation and employment metrics were approaching levels that might warrant a reduction in rates. The probability of a December rate cut was priced at over 75%【127†source】【129†source】.

2. Sector-Specific Developments: Technology stocks led gains, particularly within the Nasdaq, which hit a new record high. Meanwhile, the broader S&P 500 also posted modest gains as investor sentiment was buoyed by strong holiday sales data from Black Friday and Cyber Monday【127†source】.

3. Economic Data: Markets awaited upcoming reports such as November’s nonfarm payroll data and other employment metrics, which could significantly shape the Federal Reserve's decision-making process. Retail sales trends also painted a positive picture for consumer spending, aiding market sentiment【127†source】.

This combination of optimism surrounding Federal Reserve policy and robust consumer activity bolstered U.S. equity markets during the trading day.

12/4 Post

 Today, U.S. financial markets experienced significant gains, with the S&P 500 and Nasdaq Composite reaching new record highs. The rally was driven by investor optimism about a potential Federal Reserve interest rate cut later this month, boosting confidence in sectors such as technology, financials, and real estate. The dollar strengthened against major currencies, while anticipation of easing inflation added to positive market sentiment.

Despite broader economic concerns, market analysts remain cautiously optimistic, attributing much of the rally to improving macroeconomic conditions and expectations of a more accommodative monetary policy.

12/3 Post

 No change today. range day within the context of yesterday's range. Very short term market now in a 2-day range in the context of the longer term up trend. 

Today, U.S. stock markets saw notable gains, with the S&P 500 and Nasdaq Composite reaching record highs. This positive performance was largely driven by strong investor sentiment around a potential Federal Reserve rate cut later this month. Tech stocks, particularly within the semiconductor and cloud computing sectors, led the rally. Additionally, renewed optimism in the financial and real estate sectors contributed to broader market momentum.

These developments indicate growing confidence in economic resilience despite lingering concerns over inflation and global market dynamics.

Tuesday Dec. 2nd Notes

 Today the market held it all time high prices as the market continues its bull run. 6050 is the high price area.5870 is that pullback low, where the market pulled back to before continuing back to test the highs. 

Today saw steady volume as Financial stocks led the rally on optimism re: Federal Rate Cuts as treasury yields soften and eco data slightly contracts. 

 Market remains in a balance area. Perhaps it will until election ends? The edges are essentially 5800 to 5900. Market needs to accept above or below these prices to break its range. So remember you are in a range market so do not chase trends and odds are market will settle into intra day ranges. 

Last night it did trade down and test 5800 during Europe. This is the low end of the range. Being down at these prices I want to be a buyer. There is potential to break and trend higher as higher time frame buyers may be participating. Risk is if it breaks the 5800 level and it truly breaks. You can get run over buying it. 

 Yesterday I did a pretty decent job with my management and risk control. There were some bad trades in there again, too aggressive, too high risk. But at least I wasn't being stubborn and selling it out at the lows. You have to adjust your strategy when the market is in balance. Which is was yesterday and it is today. You also need to get better at taking those emotional sellers supply as opposed to missing it and then buying for continuation. These work sometimes but not enough to build a business upon. 

These types of entries are more likely in a range environment, in an uptrend environment you need to be more aggressive and in a down trend environment you will get run over. Know the trend of the day, the 1 minute trend and then know the context of the overall market via 30 min profile. Sometimes the market can be in a balance or range situation, but near the top of the range and the day's momentum could be to the downside as those longer term buyers are liquidating their inventory.  

 The lightbulb moment is that I need to use good management and risk control to trade properly. That means taking partial profits, moving trailing stops. Using hard risk and size rules. That coupled with entry guidelines and sound strategy is how I need to trade. Each of these parts are separate but work together and need to be trained. Where I have gotten into trouble last week was in poor trade management. Almost all those losing trades I could have made out okay on if I had managed the trade better. I also had poor strategy on the early trend gap open entry and poor tactics on the entry. You have to wait for those more meaningful "used gun" entries. Too much FOMO at work. 

Anyway, the market got caught short. Yesterday it opened higher and in a way all it did was bring the market into balance. In hindsight this should have been the yellow light for chasing long the gap higher. But the market closed in a 3 day balance at the lows. Well Europe took it higher overnight and now you have the potential of a break out higher. It is still in balance technically so beware of buying in the upper part of this balance as you leverage off intra day supports for longs. Keep your risk tight, your targets tight and trail your stops. Also play on the defensive when it comes to an intra day trend lower as well.  

25 Oct 24

 Yesterday was a an early attempt to push lower and test the prior day low. It failed to get down there and that was the best opportunity on the day. I think I was busy at the time so was not at the "store" when those distressed sellers showed up and some other dealer was able to take the supply. I did try to play it later int he afternoon buying the breaks as it was clear shorts were stuck and there was going to be demand throughout the day. With that said, I still had some bad buys getting stuck with some lame inventory. This comes from a lack of patience and discipline for those better entries - tails, oversold conditions etc.

Lastly the risk control was good. The stop use was good and coming at the trades from a the perspective of how do I manage that 2% risk as opposed to how do I make as much on this trade as possible has been a major shift. Look at the stops as high% sell locations and then size accordingly. Today try using the 5 minute as the main screen and the 1 minute for confirmation - maybe ill shrink it down to  3 or 4 minute to manage some of the risk. 

Anyway, yesterday failed to break low, closed near highs and continued trending overnight. Will open gap higher. Look for longs, watch the gap. Beware of overbought conditions however. 

Today two things happened. One I was buying up at the highs expecting a trend day to continue and then I tried buying as the market was pulling back. Note how the market consolidated mid day. The ADX dropped and the market broke down from consolidation and there was no buying. But the trades today where I lost were spec. trades. I spec. bought a possible range break high that failed and I spec. bought the early trend. So what system can I put in place to SOOT during these markets? The risk management is definitely one. Actually the problem is not the analysis. It's the FOMO buying especially coupled with more management and risk controls. You know when it is a FOMO buy, and if you still do it, you have to manage that risk with small sizes, trail stops and tight targets. But really, just minimize the FOMO. Wait for some emotional selling. Wait for more clear technical signals.  

24-Oct-24 Journal Entry

 Yesterday was a trend day down as the market broke the downside a longer term range. You had a High ADX as the EMA's were clearly flashing red. I had even planned to SOH if the prior day's lows were breached, but I still bought inventory and took some pretty ugly losses. My usual strategy of using this 3LB as a turn indicator whipsawed as the day was a down trend. Important lesson here on the odds of that strategy working when you not only don't have support to lean on but you are actually spitting in the wind of a down trend. Any buying in these instances are contra-trend scalps only. HOWEVER, there is good odds that at some point during the day there will be a short term reversal and the air will fill on the 5 minute because eventually the down trend will reach a higher time frame support. Yesterday it was signaled by a change in the TICK - but you run a very high risk of getting destroyed as you try to pick when it may happen. Another important factor is that it occurred after the symmetry of the down trend broke. This is because people follow crowds and crowds follow patterns. When that pattern breaks uncertainty afflicts the market and emotion sets in. This sets up the great buying opportunities where that reversal can finally play out as you now have pent up demand of stuck shorts and puking longs selling at the lows. 

But my big losses were not because I didn't properly time the market, which is impossible, it was because I failed in my risk management. I put on way too much size in especially inappropriate scenarios, basically scenarios where I was fading a 5 min. downtrend. I don't have a risk management plan in place yet. My sizing is random and I was adding in low probability settings - settings where I was fading a downtrend. So there needs to be a system built for trading down trend days, up trend days and range days. 

I will use the 2%/6% rule. No more than 2% loss per trade and once 6% drawdown on the day, trigger a shot off of trading for rest of day. Pretend my account balance is 50,000 and I am trading E-minis so that means no greater loss than 20 points per trade and no greater loss than 60 points per day. 

So far my strategy for range day: buy when 5 min. stochastic is oversold and the market, use supports to guide good prices, use 1min. 3lb as a turn signal. Essentially the strategy is to buy below value and sell when it returns to value, maybe leave one on for retail sale. Risk on these trades is you make a bad buy, in which case you have some bad inventory and you want to just let it go - this is where stochastic and support are used. 3LB is used for adding to the trades. Other major risk is that something shakes up the market and it triggers into a trend day down, this is where your 2% stop is put into play. But know the market. Know where you want to be a buyer and know where you don't.

I flesh out the other strategies at a later day.  

 

Yesterday the market trended lower. Perhaps filled air on a higher time frame up trend and is continuing higher as overnight saw the market trade up and hold higher prices. There is support near the low of yesterday's range and resistance near the highs. Run system 1 today. beware of bad buys at too high prices though and getting stuck with bad inventory that could flush you out and hit 2%. Know where you are in the day's range, don't get caught on the wring side of the 1 min trend and don't get caught long with 5 min Overbought stochastics.  

Trading mid range has always been one of my weaknesses. Regardless of what time frame you are on, if you are in the middle of a range or a channel, the market is at a tipping point and it is difficult to determine the probability of what a given rhythm will be. Yesterday was an example of that. Without a doubt trading yesterday, I developed experience in trading a certain rhythm. Yesterday was a low VIX, low vol. grind higher. It traded in a very tight 5 minute channel and consisted of mini consolidations follow by mini breaks with very hard to navigate retracements.

I had the early bull bias nailed, but price neared prior day resistance, I got into trouble. My initial bias was that price would remain in the consolidation/range it had been in after Wednesdays run higher. My trade premises were thus shorts with the expectation of it rotating back down. As you can see that never happened, and I was doomed to fighting the tape, scratching and reentering higher getting squeezed all the way up. I gave back the nice profit I created this morning. When I finally realized what was happening, I started looking for fades, but given the low VIX grind rhythm, to find a fade that paid adequately was something I could not accomplish. The entries were nearly impossible to time. As the old saying goes, never short a dull market. Fades work best in emotional markets. Yesterday, that panic and emotional overshoot was not there. The rhythm was setup by the daily bull channel, supported by hourly bull trends within the channel.

 

The pink bar represents yesterday. Before the day opened, you can see air to the upside as price was in the middle of this channel. Price had also been somewhat consolidated over the past 2 days or so. That pink circle shows the bear trap that drove my bullish bias in the early part of the session. Shorts were stuck and they got chewed out. I'm not saying I should have bought and held long, or got long as it retraced from the 3rd/4th/5th pushes, but I need to recognize this market rhythm and no to not try to short it. Oh yeah, and look at 3 line break.

 

 

Trading is all about remaining objective and adapting to different market rhythms and conditions. I will admit I got a tiny bit emotional yesterday, after giving some back, I was too eager to try to get it back. I was afraid of missing the one and only fade opportunity, thinking it would really be my only chance to scrape out a winning trade. The result was loss and frustration. With each day in front of the screen, I get better at identifying when I'm dialed in and when I am not. As I build the armor each day, I get closer to that tipping point where my trading potential will breakout and my very own Chinese Bamboo Tree will grow to the sky.

 

 



Today was one of those very strange days where I had the market rhythm pegged to the tick. I was able to feel where the market was likely to go, placed my orders got filled and saw price move in my favor almost immediately. It is fascinating how some days this can happen, and others it feels like you are fighting the current all day long. I believe what it has to do is aligning yourself with the current market environment. For me, certain market patterns, chart patterns etc. are more easily identifiable. For example today, the 60 min had put in a nice bull cup, at the bottom of a daily bull channel, and we opened up gap down (the blue line on the 60 minute chart) with air to the upside to fill. Tick opened at -900 and price just wasn't really going down. All day I was able to maintain my bull bias and take advantage of any tests lower. The key will be screen time. Learning how to identify the immediate rhythm with conviction and knowing when I don't have it and to avoid any trouble. The daily bull still seems to be in control. That doesn't mean that everyday is a bull day, but it serves as further confirmation for bullish price zones.

Rhythm showing a 2 hour bear trend channel within the daily bull channel. There is air on the 120 min channel as well as air on the daily channel. When these two rhythms align around 1650, I think there will be very high % long premises. Today we just chopped around inside of the top of that 2 hour trend. The high % trade today was the buy at the open, air fill to the top of that bear trend. Tonight something will give on the debt ceiling incident. Something will either be passed or in a more surprising turn of events, the gov't will temporarily shut down. Either way I believe there will be some sort of price reaction that could muddy the waters OR provide some great opportunity. Bottom line is be careful, stay patient and play your game. Not taking action is always better than taking losing action.

I hated today's action. As the market opened, I never was able to get in synch with the rhythm, pace and market pattern. I was also strapped for time because I had my other business obligations looming. I don't know why, but I was putting on position in a market I had no feel for. Maybe because I felt pressured to get something going because I wasn't going to be there all day? Or maybe I became complacent due to recent successful trades. Either way I got chopped up in that red circle there. No bother though. Every mistake is just an indication of where I am in my development as a trader and provides a lesson on what I need to do to improve!

Price traded in a range again today. But todays support and resistance levels were lower than the prior days. Could be a sign of weakness... Also, a slightly sloppy head and shoulders pattern is forming on the high time frames. Could see air on the daily channel fill down to 1650 if this breaks down. The break is hard to catch, so don't get emotional and try to preempt it, there will always be opportunity in the wake of a market splash. Let things develop and let the logical side of your brain stay in charge.

Week 3: The Tao of Poker

Rule 249: Enter the white fear. A really devastating loss can change your perception.
There is a certain kind of loss that is psychologically crippling. It is of such intensity and dimension that it takes the wind out of your sails and knocks you completely for a loop. It is both the magnitude of the loss and the way it happens that grants it special recognition, moves it up into your "Top-5" list of horror-shows. It almost feels like a personal offense, a betrayal the way it happens.

Will such an occurrence make you change your long-term approach? Probably not. But you'll never think of things in quite the same way again. Something changes in you. For you now know this type of situation is out there. it can exist and it can happen. From now on it will always be in the back of your mind, and will color the way you view the world forever.

 

Pretty inopportune action overnight. I caught a nibble at a long at that green dot. But price seems to really be on the fence at this 1690 level. I guess as long as its holding above I'm biased long. Be aware though that sooner or later a direction will be decided upon.

The 1690 support was tested about an hour after the open. Price traded below support for about 15 minutes, probing as low as 87.5. By retaking the 1690 support, stuck shorts set up a great long premise. As you can see on the 15 min. chart above, this second 1690 probe short showed a weaker stochastic. This plus the VIX (which isn't pictured) gave added conviction. I entered at the green dot when the bull cup patters was completed. Price eventually ran out of momentum at the 1700 resistance, which has proven to be legit. It finished down back at 1690. This has been like an extended MATD oscillation environment reacting to Friday's bear trend. Looking forward to see how this develops. #dialedin

Overnight price traded in a tight range respecting 1690. Twice it tried to trade up, trapping longs in the 62-63 price (red dots). Could possibly fuel selling if this breaks down the 90 support. On a trader development note, I am starting to literally feel in my body the difference when I look at a premise I want to take for emotional purposes and a premise I want to take out of detecting objective opportunity. Ne3ed to remain focused on developing this "feel". Star pressing the objective feel and trade very lightly on the emotional speculations.

The hardest part about trading is not  trading. I spent the hours between 3 am and that green dot getting chopped up in the markets trading a rhythm I did not have a feel for. The sequence I took at that green dot lasted a mere 3 minutes and erased the deficit I created up to that point. When I entered that trade, I knew it was a high probability hand. I knew that everything I did before was trash. The only problem was I didn't know it until I figured out what the rhythm was and understood how strong the premise was for that buy. I am starting to get sniffs of what it's like to feel a rhythm and trust it. What I need to focus on now is when I don't feel that rhythm and not trading when I don't have it. It's very simple to grasp but difficult to do.

Prior day's HTF bull cup continued to extend over night. Backdrop for bullish action plus pre-FOMC announcement tendency makes me long bias today. However the volatility and pace will be dried up so be aware of the potential per trades. 1700 appears to be new support level. Gift long would be down at 97 - DAX keeping ES under 1700.


...

Took one on the chin hard today. Never really was able to get in synch with the rhythm and got whipped up in the early day low vol. chop. I had decent entries on my TUB of support premise, but for some reason, in direct conflict with today's rhythm, I tried to force every entry by adding when price reached the top of its interim ranges. I went on tilt hard pretty early on and just pressed with no focus, regard or care for what was happening in the market. As the FOMC announcement of NO TAPER was released, I tried to press for it all back by fading what I felt was extreme prices. That is fine, but the problem is when taking blind, highly emotional fades, you must have laser like focus and I was basically on tilt. Barfing it out with the retail squeeze's every single time. Need to get up, dust myself off and regroup. Successful trading is a state of mind. It is not market analysis. The action from today will offer some pretty solid opportunities tomorrow (presumably). I just need to make sure I am awake for them and mentally focused when they arrive. Laughing Man out...

Week 2: The Tao of Pooh

To know the Way,

We go the Way;

We do the Way

The way we do

The things we do

It's all there in front of you,

But if you try too hard to see it,

You'll only become Confused.

 

I am me,

And you are you,

As you can see;

But when you do

The things that you can do,

You will find the Way,

And the Way will follow you.

 

I read this book in middle school about a decade ago. Obviously at that time I got literally no benefit from the content. I found this book extremely enjoyable. It was a very easy read about the principles of Taoism using the characters of Milne's Winnie the Pooh as the backdrop. I truly extracted a lot of wisdom from this book. The message can essentially be summed up in the poem above. It is a little cryptic but if you read it word by word, you'll figure it out. Everything has an inner nature. The quickest way to peace is to understand that inner nature and be aware and accepting of it. Do not try to force the ways of nature. They must be allowed to flow in their own natural ways.