Review and analysis for Monday 1-24-11

Last week ES traded below key support at 1274 area and bounced off of the VPOC of that balance area below (1274-1258). Fridays session spent the day establishing value back into the range and making for a false break type situation. ES traded down to 50% retrace of the move also the lows in globex . So the expectation was for the market to trade higher if we can stay above 1274 area and we have been trending higher throughout the day. For the most part the market played out according to my expectations. The only problem was i didn't follow my plan this morning and i should have been looking to get long on that second test of the open which was in a support area. I

1st Trade: I took this trade on a test of the highs as resistance and the order flow died above that resistance. The trade resulted in taking a scratch. I think the reason was because it was bad trade location and i took some heat on it because of it. i should have stuck with my original plan and waited for the globex highs area which is the first resistance zone on my chart. This would have offered a better trade location and higher chance of seeing a rotation.

 2nd Trade: This trade was taken because the market got to my resistance area that i wanted to trade at. My expectation was for the market to move higher but i was also looking for opps to sell at resistance due to the expectation of a balanced market. I took a scratch on this trade after it got in front a point. I didn't see any follow through from the sellers so i tightened up my risk and bailed when i had the opp to do so. I only took a tick of heat on the trade so entry was good. I might have been better waiting for a better test of this area.

3rd trade: This trade was a break trade of an intraday support level. The market topped out at 1288.75 then traded lower and selling picked up as it broke the 1285.50 level. i waited for the retrace and got short. The market started chopping around and i decided to exit after being 1 point in front then bouncing back up to my entry. The market bounced right off the VWAP and the 50 % retrace of the move up on the day. This was the correct move i made cause ES popped back up. I guess this day was meant to close higher lol.

Trade plan and levels for Monday 1-24-11

News: No releases today

Daily chart notes: ES is still in an uptrend and the recent action can be viewed as a pullback in the uptrend. Es came down and tested the VPOC from the recent consolidation that was broken last week and put in a weak bounce. I will monitor for follow through to the upside.

MP Notes:  As of writing this Sundays session is at 1280.25 and putting in a b shape profile indicating people wanting to sell or long liquidation. We are still in the same area as Fridays value that built out over the session. We have support at 1273s and low of last week at 1268 which is also where the VPOC from the composite is at. On the profile we are sat in the middle of last week's range so not expecting much today

Trade plan: ES tested the POC last week and bouncing back above major support and off a trend line. Im expecting ES to trade higher if we can hold above 1274s. If ES breaks below globex low area at 1278 that would be a red flag for buyers and a possible test is likely of the 1274s area and the 1268s area. If 1268 fails then a test of the low volume area at 1258 which is the bottom of the recent balance area is likely. Over all being in the middle of the range last week and lack of catalyst out today im expecting a balanced session and will be looking to play at the extremes. We have a gap fill at 1276 and would be a good target if short from globex highs resistance zone.

  I will look to be a responsive seller at globex highs area around 1284s if we break above that i will look to be a responsive seller at the highs of the year around 1295s where i expect buying to shut off. On the down side i will look for long opps to go with the pull back at the 50% retrace level of the move from the lows if ES breaks globex lows at 1278s area it would be a red flag and leave the door open for a retest of the 1274s support and ultimately 1268 area. I will be cautious at the 1274s area and would rather look to be a buyer at 1258s. Overall i will wait for the open to set up and be patient.