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 January 15, 2004
Commentary-
Today was one of the best intraday trading
days I've seen in I don't know how long. What I wouldn't give for it to be like
this every day. I don't think I'd be able to stand it.
Let's start
with some follow up on a few plays that we are watching, and then I'll show a
trade that I found today. First, let's see what the VTSS play is doing on the
daily timeframe.
That little pullback/consolidation VTSS was
doing was just a springboard for today's upward thrust. My normal temptation
would be to scale out of another piece on today's big thrust. The volume was
huge at almost 18 million shares, compared to a recent average under 5 million
shares per day.
Normally I'd be thinking that this was a buying climax, but I'm not
so sure. This might be the start of something big. I'm willing to risk giving
back a little bit more in exchange for holding a bigger piece while I see if
this is the start of something. I had to make a judgment call here, and you can
see how I'm playing this.
Let's look at FDX on the daily, also.
FDX is now resting/consolidating here, with a
slight upward bent. It is also doing this right under the high for the move,
without pulling back. That may mean a pullback is going to start soon, or it
may mean that FDX is going to blow out to the upside after this pause. The
latter would be a sign of some serious strength in my opinion.
For that
reason I've not scaled out of any of this play yet. Like VTSS, I'm willing to
give back a little more (by having a larger position open if a
pullback/reversal starts) in exchange for a larger position if we do ramp up
from this pause. It's a subjective decision, and this is how I decided to play
this one. The volume on this one has also dried up considerably, which I view
as bullish in here.
Let's take a look at a play that I spotted today on the
ES 3-minute chart. After the big sell off that started just about at the open I
saw something setup. Recall yesterday's play and the tremendous ramp that set
up? When the harsh selling brought the ES right back down to that point, on
notable volume, the 3-minute threw a reversal bar right off that area, within
one tick (not to mention an .886 ABCD). Let's look at the chart.
I decided that if the area was so significant yesterday,
and the overall trend was still bullish, this retest of an area that proved so
harmonic yesterday likely would be worth a shot today. I waited for an entry
signal and got one very quickly.
I had a tight stop just under the
grouping from yesterday. While most people were thinking 'fill the gap' I was
thinking the area was going to hold. Or I was going to assume so until proven
otherwise. Let's see what happened.
The ramp up was just incredible. This was a management dream for
me. Understand that my style of mini trading would best be called 'intraday
swing trading'. I like to play trends most discernable on the 3-minute chart.
There are no swings on this ramp up greater than the swings I normally expect
to see on a trend on the 3-minute chart.
Using my trailing stops method, I
was able to ride some of my contracts out all the way to this point, and then
scale them out just below here as the ES turned back down. Sure, not all that
many trades work out as great as this, but my plan is to be in some of the
original position when they do play out like this.
This play,
and yesterday's ramp, were just gifts from the trading gods from a management
standpoint. This is what I mean in Kane Trading on: Trailing Stops
when I discuss maximizing a run. It doesn't take a lot of trades like this to
really boost the 'Trading Plan'.
I really love the Thursdays before
options expiration, and today was a great example of why. Even the Wednesdays
before that are frequently getting to be good for trading. Lately I have found
the actual expiration Fridays to be dull. I have a feeling that this Friday may
be different, though.
With this being a three-day weekend and an
expiration Friday, I'd usually be ready to start an early weekend. This time,
though, I'm getting ready for some potential action. I normally don't expect
quiet when the ES sets yet another new contract high…
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