 |
| Click To Enlarge |
|
|
 |
| Click To Enlarge |
|
|
October 11, 2005 Morning Comments: Prices have been trading in a solid down trend now for more than five trading days. The key to profitability in this run lower has been to look for solid trade set ups that come at lines that have previously been tested—and of course to trade with the trend. And while last week’s best trade set ups seemed to come in the late morning or even at mid-day, today you’ll see that there was a gorgeous test and re-test sale at the Major down sloping Median Line that has been “calling the tune” all of last week that came within the first 45 minutes of trading. Again, it was the quality of the trade set up and its proximity at a tested major line that really made this trade entry jump out at me.
The first chart, above, shows you the “close in” look of the pre-market chart posted on the seminar forum. The second chart is a longer-term perspective, so traders can see where the lines originated from and IF they’ve been tested in the past and how well price respected each line in the past |
 |
| Click To Enlarge |
|
|
You can see I found two solid entry areas at the re-test of the major green down sloping Median Line. The first trade came at a test and re-test of the green Median Line, with a limit sale at 1197 ¼, an initial stop loss three ticks above the 1198 high of the day, at 1198 ¾ and a profit target at the test of the 1st red up sloping warning line [which was also one S&P point above Monday’s 1189 ½ low], at 1190 ½.
Price then climbed out of the hole, though I didn’t see any solid long entries that carried acceptable risk reward ratios [nor was I looking to get long, to be honest, until price proved it had already changed trends] and headed back towards the same major green Median Line. And once price got close, I put in another set of orders:
I sold S&Ps at a limit of 1196 ½, with the same initial stop loss three ticks above the 1198 high of the day, at 1198 ¾. This entry was a straight sell at a tested major line and I expected that if price headed lower from here, it would likely take out the day’s lows and head to test the 2nd red warning line, which came in at roughly 1186 ½. Price did get me short and did head lower, breaking well below the day’s prior low and making a low of 1187, ½ a point from my profit target on the trade. As 2:30 pm rolled around, I exited the trade at 1188, locking in a second nice profit on the day.
I have said here on this page too many times to count: When you find a line that works, beat on it until it beats you. So far, this green Median Line has been golden! I wish you all good trading!
Tim Morge |
|