This is Thursday, October 29th and I did not post yesterday, got a little behind.

In Tuesdays post, I mentioned that I was a little suspect that the support I identified would give way, because of the divergence present in the Dow. In Mondays post, I had said that if the Tuesday support numbers failed, that the next area of support was around the 1045-46 area in the cash S&P. In yesterdays market, the Tuesday support did break and we went just a few points past my support numbers at 1042-1043, really pretty close.

That support area held beautifully in todays session and as I write this update at 12:03 pm West Coast time, the cash S&P market is up over 23 points off of that support call. The market is likely to drift sideways to slightly up over the next couple of days, but the new very clear line in the sand will be yesterdays pivot low of 1042.56. If we break that, we are going to see some additional selling. 

The Dow is still outperforming the other index’s and that still poses a problem. Until the Dow can do its thing and correct to the right balances, it becomes a little harder to get a good read on direction looking out over the next week. I do see the potential for a S&P futures retracement up to 1068+ which is really not that far away from where we are now. Currently we are attempting to break yesterdays high around 1063 in the futures, we will see.

Today was a classic trend day up. They don’t happen that often, but it usually pays to have small targets if trading counter trend. While trading with the dominant trend, you have much more opportunity for multiple points.

Yesterday was a trend day down and today the opposite. This in a way, has created a V bottom and is usually retested sometime later. In addition we did have a gap day as well. I like to look at the symbol “SPY”. This is a tracking stock for the S&P 500. People trade this very heavily. The volume on this today came in at 200 million shares, with the shares being priced at 106.64. If you add a zero to the 4 at the end and move the decimal over to the right by one, you will get a price of 1066.40 and that is the same price as the Index.

The reason why I point that out is because, you can get a better idea what the opening gap was for a day like today. Opening gaps have a whole strategy to themselves, that I won’t go into right now, but it clearly defines the opening and any gaps that are present.

Below, I have a screen shot of a few trades I took late in the session. I have not been trading the open or the slow mid day time, but just the later half of the session. That is going to change pretty soon. This mornings open was pretty clear for some nice scalp trades and often the price action is a lot heavier and faster. I don’t mind the speed of the action, I usually have plenty of time to get the price I want, but the best part is after an entry, the order is filled to the target in a blink. That is because of order placement. If you put the order in the right place, the stop pressure and regular buying or selling pressure pushes it in your direction in a flash.

I prefer scalp trading overall, because you are not in the market for a very long time and it only takes about 3 little trades to get my goal for the day and thats it. I never cry about what I could have had or should have had, that thinking will only take you down, out and left for dead. Every trader needs to keep their expectation under control and not let greed take root. There are a lot of people who talk about greed and lets through in fear to boot. But translate that into something everyday traders can sink their teeth into. Let me do that right now.

First, you need to know that trading and taking profit out of the markets is not natural or easy. You need to do the things that only the very few every find out about. A lot of what I am saying is not the actual trading but the mental side of trading. Being satisfied with hitting your target, what ever that is. If you start second guessing yourself, you only work against you. We trade against other traders, but we often end up beating ourselves. Do not let greed take root. I believe every trader should have an area of profit in mind for the day. If you don’t, you leave yourself open to wanting more and more.

Most traders blow their account up pretty fast, because of two reasons. They don’t manage there losses well and that could be attributed to not finishing the day with a gain, reason being, they did not make enough. Ask yourself, how much is enough for a day’s profits?  You will get a lot of different answers to that question I am sure. We may come up with different figures and when we hit that figure during the trading day, somehow, all of the sudden, it no longer seems to be enough. That is where the problem is. Discipline yourself and stay in control. Follow your trading plan. You should be hitting your daily goal 4 out of 5 days at a minimum.

If you are struggling, tell yourself, that you will not take any trades during your session, at all and mean it. But, in the case that you happen to see a trade that is a “screaming buy”, you can take it.  That takes the pressure off from feeling that you have to trade. I call this “Trading by Exception”. I talk about it in my trading course and it can bring the trading advantage back on your side of the fence.  You end up taking less trades this way which is good and you make them count.        vinnie@sniperdaytrading.com

 http://www.screencast.com/t/ZvGKpNkd