And the Initiated Move Down from this Morning Finally Continues

The market showed its hand this morning when it broke down below the key support of 1094 but proved it wouldn't make it easy to capitalize on the expected continuation. Maybe you can blame it on supplemental liquidity providers (computer based algorithmic trading from such organizations as Goldman Sachs and Deutsche Bank) adding support to a selling market or maybe it really is just an indecisive market. Whatever the case, it can be difficult to maintain conviction in a trading decision as the market seems to do what it can to make the average trader change his or her mind. As we have made another new low in the final hour of trading, it still proves difficult to get sustained selling. The gap from Friday has yet to be filled (officially at 1089.25 on the ES), though it will be filled.

Like Herman Hesse writes in Siddhartha, waiting, fasting and thinking are his protagonists three best skills. These skills make a successful trader as well. Waiting or patience is necessary to avoid making hasty decisions out of greed or fear. They do call it a virtue. Fasting can be applied to holding a position without rushing to take profits. Go without profits in the short term and open yourself up for greater reward in the longer term. Thinking is obviously what ties it all together. Thinking is what allows you to analyse the markets effectively and give you the sense and discipline to fast. To fast you need patience.

Be patient and wait for the gap to be filled. Most likely, not only will the gap be filled, but we should see the ES trade down into the 1086s.

This Morning

Friday's low is a key level this morning. Any price action below 1094 (ES) will likely result in a move back into the 1080s. This also means that the mid 1090s make an attractive potential long entry. I have actually been long at 1096 since last night but the market has just been flat. 1095-96 is a great long (if we trade back down to that level) because you can put your stop anywhere between 1093 and 1094.75 and have a pretty low risk trade with potentially significant gains. First target is 1101, then 1106, then 1112.

If the ES trades down and breaks below 1094, it will be an opportunity to flip and go short. Initial target in that case would be 1088 and then 1080.

Those are just a couple of options to consider this morning in an otherwise uninteresting market. No significant news this week until Thursday. Perhaps Thursday will present the first real opportunity to go short. That is assuming the mid 1090s support holds today...