Today promised should be an interesting day. Participation and internals yesterday were horrid. Most buying was done by small trade ticket buyers. Market structure was also sloppy. We tracked intraday MSP extremely well getting an early morning high, and 10:30 AM low a move of over 20 points ES - however, lows should have continued into 1:30 PM. Timing works its magic of course in that the highs of the cash session was 1:24 PM and led to an impulsive decline in the close.
Additionally, e-Tick Tools generated amazing emotional extremes. 93% of emotional extremes lead to 3.25 point ES moves - more than enough to make a nice living. Yesterday's triggers lead to much more than that. The preferred approach is to trade with some running contracts but to book profits incrementally into the average reaction which is around 5 to 7 points. All of our automated trading systems use this convention - using a process called trade reticulation. The biggest problem with most discretionary trading is being enamored with the big large point winners. This is not productive as it leads to consistent losses and large ones at that. The best way to trade is to BOOK PROFIT RELENTLESSLY as my systems do. Yesterday emotional inflection points were triggered, and executable to 16 to 18 points easily - how many trend traders can capture nearly 20 points in a day without taking a few 5 to 7 point losses or worse? BOOK PROFITS - regardless of timeframe - this is the biggest mistake of discretionary traders. 7 points is the diffusion target currently on ES and 7 points is a LOT OF MONEY.
Bias is negative for the AM session versus yesterday's AM session on the daily MSP chart posted earlier in the week - this condition has been fulfilled presently as of the publishing of this article. Overnight session promised chop, and it has delivered. If no early AM bounce appears the most bearish case for today becomes the highest probability [GOLD MSP on chart]. Strength materializes into the open that should be reverse around the open prints into swift weakness. In all cases, watch for 11:30 AM lows and a fairly useless day after that.
From today's lows, wherever they occur, modest positive bias on Daily MSP projections exists into Monday AM. However, next week probabilities turn decently negative after that into midweek.