End of day review Tuesday 2-8-11

So ES traded within a balanced area as expected. We just didn't get the rotations i thought we would get. I tried a short at the globex highs and this was good for 2 points and the long this morning i took was good for at least 4 points and i should have held this with a runner for the 4 point target. I described in 2nd trade i will only leave runners if the wind is at my back and will take both lots off for 2 points when the market doesn't support a runner. Just things i need to do to adapt to becoming a more efficient trader.

1St Trade: The context is bullish and first support was globex lows at 1314 area. We also had a neutral macro structure. So i was waiting for a move to get long into and when we tested globex lows the order flow shifted to the buy side and the book firmed up on the bid giving me the confidence to get long at 14.25. I felt good about this trade. I did take a point of heat. I don't think i jumped in to early we just had one more flush of the sellers before buyers took control. I took one off for 2 points and let the other run for 3 but i took second off for 2 when i saw the sellers keeping price at bay. In hind sight it wasn't a good idea to move my second target. But i want to keep with my plan of taking my position off at +2 so i can build up my size quicker. Once i am trading a 3 lot i will take 2 off for + 2 points and let other ride for extended targets.

2nd Trade: I took this trade after the rejection of globex highs. It was a counter trend trade but everything lined up for me so i pulled the trigger. I only took 1 tick of heat but it took forever to follow through. I had 1 target at 2 points and other at 3 and I'm starting to realize that is not such a good idea. The reason is the risk to reward for the runner. If i take one off for 2 points and let the other run for 3 points my risk to reward is 2:1 on the runner. So i would be risking the 2 points i already have to make 1 more point. That doesn't make too much sense to me especially on a counter trend trade when trying to get 2 points is hard enough. So what i will do for now on is take 2 points on both lots and will take full position off at 2 points in the future unless I'm going with the trend and context. In other words i need the wind at my back to leave a runner on for at least 4 points or more. Then i will have at least a 2:2 risk to reward for the runner.

Pre Market Analysis 2-8-11 Tuesday

News: No notable releases out today

Daily chart Notes: ES is still in an uptrend and showing no signs of changing any time soon. We have broken the previous range highs and have made new highs on the year yesterday. So the trend remains up.

MP Notes: We had a big week last week and ES should start ranging which is yet to be established. Sunday globex saw ES put value higher up and Monday followed through to the upside establishing value at new highs of the year. Last night globex has put value in the same area as yesterdays sessions. We have a neutral macro at the moment and I'm expecting a range bound session to set up today.

Trade plan: My bias in ES is bullish because we buyers have been in control for a little while now. The trend is up and no since in fighting it. So i will be looking for opportunities to buy pullbacks into support levels laid out on my 30 min chart. With the lack of catalyst out today i will be expecting a balanced session and will look to play at the extremes. In the case that ES trades lower i will be looking for long trades back into target areas above. The first level of support is globex lows around 1313-1314 and i will see what happens around there. Then below that is 1304-1306 area which is strong support and i expect buyers to be active there on first test of that area. In the case of some more buying coming into ES i will wait to see signs of the buying to exhausting at the highs of the year before i take any shorts down into target areas. 1321-1323 is resistance above high of day yesterday and globex high and this would be a great area for sellers to step in and try to push ES down into support. Also worth noting is volume has been really light up here making new highs.