Tuesday 05/26/09 - Parabolic Moves Suck

I don't like trading days like today where there's a quick parabolic move followed by a slow grind. I've seen these types of days before so I traded it as I knew best, which was by identifying the consolidation ranges and buying towards the bottom of the range. I'm glad I didn't attempt to Short the move, although I have to say the temptation was most certainly there. The disappointing part is, I had a Buy signal at 885 prior to the Consumer Confidence news, but didn't take it because I saw (perceived) weakness in the Energy sector (XLE). Perhaps I'm putting too much weight in the Energy and Financial sectors, and should just use them as a general barometer, rather than a criteria for trade entry. Any thoughts on this would be appreciated.

I only took three trades today so I'll go over them (Chart attached below)

Trade #1
Entered Long on small pullback at 900 around 9:30 AM (central). Moved stop-loss to break-even when position went 6 ticks in favor. I was stopped out at break-even a few minutes later, and price moved 4+ points in my favor immediately after I was stopped out (doh!)

Trade #2:
Entered Long at 904.75 around 10:50 AM. I definitely entered a bit early on this one; should have entered at 903.75, but it is what it is. I was using a 2-pt stop-loss, and price hit a low of 902.75 at 11:10 AM, and I was promptly stopped out for -2 pts. That was the Low point of the swing, and price didn't touch 902.75 for the remainder of the session (luck was def. not on my side today).

Trade #3:
Entered Long at 903.00 around 11:15 AM with a 6-tick stop-loss. Let this one run for +4 pts, and exited at 907.00 around 11:50 AM. I was expecting price to head higher, but didn't want to be greedy (Friday's Stop-Loss experiment showed that it's good to take profit once price has moved 4-5 pts in favor). I called it a day at this point since price was just chopping around.

ES (5-Min) - Trade Chart


Stats:

# of Trades	3
Longs	3
Shorts	0
% Break-Even:	33.33
% Win	33.33
% Loss	33.33
Avg Win	4.00
Avg Loss	-2.00
Largest Win (pts)	4.00
Largest Loss (pts)	-2.00
Total Win (pts)	4.00
Total Loss (pts)	-2.00
Net Gain/Loss (pts)	2.00
ES Daily Range	32.75
P/L as % of Daily Range	6.11

Lot of Econ News out this week so there should be plenty of volatility in the markets. Expecting support at 893 and resistance at 916 and 923. Existing Home Sales data out at 9:00 AM tomorrow. Btw, I won't be trading tomorrow since I have to head to Downtown to take care of all the paperwork for the new job.

ES (Daily) - Today's bullish candle on the Daily took out the bearish movement of the previous 3-4 sessions.