And We Get the Retest of the Prior 1092 Resistance.

As I said in prior posts, a short entry at my resistance levels would be a safe trade even if it went against you. As you can see, we have come back down and retested back below my 1092 level, an opportunity to exit a short for no loss or even to make money depending how you managed your position.

I am currently flat as I will let the market tell me what it wants to do next. I do have a slight long bias now as the market did confirm a move above 1092 on the intra-day time frame. We did not confirm the move on the daily time frame, so that leaves uncertainty here. We have a gap from back on 8/10 that needs to fill at some point at 1118, so that is a potential target to the upside that seems plausible after today's action. However, we have today's gap up to fill as well, so that can just as easily be a target to the downside.

So I guess the main point I am trying to make is that at the current trading level, I am only interested in scalps because any longer term move could just as easily go in one direction as the other. If you want to enter a swing position here, try and build a small base with some successful scalp trades. Then you can use your profits to give you a stop loss cushion for a longer term swing entry.

Thats it for now... we'll see how the market moves in the overnight GLOBEX session

Short Again at 1097.50

Looking for 1 or 2 points here... Will scratch if it takes too long to move or if it ticks above 1098. I am still holding my short from 1093 as well...

What is Confirmation?

I mentioned that my short bias would change if we confirmed a move above 1092. So what confirms a move above 1092? Well it really depends what time frame you are trading, but I will generally look at the 60 minute intra-day chart to base my analysis of an intra-day market move. So, just because we move above 1092 does not confirm that the market will continue in that direction. What I look for is a subsequent candle close higher than the first candle close above a specific level. In this case, the level is 1092. We are currently trading higher than the first candle close above 1092. This is a negative sign. If you want to jump the gun and cover your short here in anticipation that the move will be confirmed you can do that. However, until we close the current 60 minute candle above the high of the last 60 minute candle, we do not have confirmation.

I would advise against covering the short now out of fear. I would recommend patience. You can keep a cool head in this case if you think about the market in this manner and if you have this philosophy as part of your trading plan. There is no reason to get overly excited here. We have seen an exponential move higher this morning and all large moves will see a pull back. Also the fact that we broke above a key resistance level suggests that the market must retest that level. 1092 is a key level. The fact that a straight move up was necessary to touch the level and a further move was necessary to break it, it just increases the odds that the market will eventually pull back to that level. So, the fact that I am short right now at 1093 does not frighten me. I can be relaxed and hold this position.

Hitting Resistance Now

Not jumping to get short yet here at 1091. I want to wait until this up move fails before I risk taking a short...

Market Approaching Top of Consolidation Range

Futures trading up this morning and key resistance on the ES remains at 1089-1092. I'll be watching that range closely as a close above it will force me to reconsider my bearish bias. I am a seller all the way up to 1092.

Housing starts and PPI announced at 8:30am EST and Industrial Production at 9:15am. A weaker than expected housing number could push the markets down. We'll see if the market responds. I am currently short the ES at 1084.50. I will exit this position if news is overwhelmingly positive. I will however look to get short again when the market finds resistance. As I said, I will not change my negative bias until we confirm a move above 1092.