Down Mo, Down....Good Dog

Momentum is every traders friend.  Whether trend, contrarian or spreader, no matter your time frame, everyone loves momentum.  Think of a situation where the wind is at your back, in comparison to the wind in your face or no wind at all.  Alex......I'll take Wind At Your Back for $500.

Now, something of value.  I am short the $ES from 1310.  I like being short in this area because there is downside momentum and it has not been easy to get on the train, whether bull nor bear.  You are forced to sell when others are buying and vice-versa.  Here is what I am seeing.

Lets start with the Daily chart.  $ES is trading right up to the Lower Momentum level (-1 Std Dev).  As you can see from the first half of June, the Lower Momentum level held the $ES in check for 8 sessions after it closed below Lower Mo on June 1st.  If $ES moves down and closes near the 7/18 Low of 1291.25, the slope of the Bands will begin to diverge and that will stoke the fire of momentum.

Lets dial this trade into a lower time frame, the 240 min chart.  The $ES has rallied 20.25 handles from the 7/18 Low without a pullback, in this time frame.  I am not fading this market purely because it has rallied 20 handles.  $ES has rallied right into the Upper Momentum on the 240, which has a slight downward slope.  Again, if $ES trades to the downside and we get a red candle on the 240, the slop of the bands will begin to point down.  This gives us more momentum.

I love trading signals that provide a "confluence" of levels.  These confluence levels provide strong signs of future price discovery, whether our thesis works or not.

Every single trade we enter needs a business plan and you owe it to yourself to develop one.  If I am wrong, my stop point is above the July 15th and 18th highs of 1315.50 and 1314.75 respectively.  A secondary stop I will run is if $ES closes above Upper Mo on the 240.  I like this type of stop because price action is leading us to discover that there is a change of momentum occurring.  I am risking a little over 5 handles from my short entry of 1310.00, but the risk could be less if we close above that Upper Mo band.  On the reward side, I am looking for the July 18th Low of 1291.25 and then the area of 1275, which has plenty of price action from June.

Be Well,

Hemi

Good is the Enemy of Great

I am sucker for inspirational one-liners.  Victory Loves Preparation; Commitment to Excellence; Play Like a Champion Today; etc....  The list can go on for ever.

Last week, my son participated in a hockey camp at Notre Dame in South Bend.  These picture were taken in one of the locker room areas of the Joyce Center.  I had never seen this one-liner before and it had a great impact on me as we drove back to the Chicago suburbs.  I thought long and hard, as the mile markers flew by, about how I could execute this is my daily life.  How do I identify areas that I am merely "Good" at because I don't focus on being "Great" at them.

In the past, I have told you about my 4 F's; Faith, Family, Finances and Fitness.....in that order.  I decided to breakdown each quadrant into the sub-topics that make-up that part of my life.  What I found is that I have too much "stuff" going on in each part of my life.  It takes a lot of time and effort to focus on so many different things and moving parts.  I would be well served to narrow that list down to the 2-3 things that are most important to me and focus on being "Great" at those things.  I am in that process now.

This obviously has direct implications in the trading world.  Great Trading is Boring.  Did you get that, Great Trading is Boring.  Sometimes the market is rockin' and you have multiple signals and positions.  Most of the time, you have to lie in the weeds like the lion and wait for the weakest prey......and then POUNCE.  You cannot allow yourself to get into "marginal" trades.  It is easy to do, especially during the summer.  The market is slow, it doesn't even look like it will hurt you, I'll just take this one, right?  Great trading does not work like that.  It takes ultimate discipline and a sensitivity to your inner voice that is unparalleled.  Save your time, energy, capital and mental capital for the best set-ups or weakest prey....like the lion does.  Conserve energy for the fight that could take your life.

Take inventory of what products you trade, what set-ups you are trading, your business plan and risk management rules.  Go back and look at your journal....oh wait, you probably don't have a journal.  Start keeping a journal, NOW.  Narrow your focus to the specific products that you have a "feel" for.  What set-ups are making you consistent money?  What set-ups are you finding it most easy to be disciplined with.  Follow your business plan for each trade.  Identify these attributes and focus on being "Great" at them.

Be Well,

Hemi