Good Question

Well thus far 3C for ES was right on about the opening action (seen at the bottom of the last post) and maybe that has a little something to do with the subject at hand as intraday volatility has been insane lately, if I had to characterize it, I'd say big opening moves with those moves being faded or losing momentum as the day wears on, but lots of volatility intraday, which brings me to a member's question from last night.

ES pre-market...

To paraphrase, the question was about the trend expectations (next move expected being a pretty fierce move down), but why I add the caveat, "But Wall Street isn't going to make it easy". The member wanted to know what I meant by that.

You've probably heard the saying or hear me say it, "We live at the right side of the chart", looking back it's easy to see what happened and often we don't appreciate that experience, but our decisions aren't made in the past, they are made at the far right side of the chart where there's no more data.

So here's a small area of SPY trade without much context, focus on the days with red or white arrows and think about how those days are very emotionally moving days, even if you know what to expect, they aren't easy days to keep the faith or they are days in which you might be over-joyed and over-confident, really they are the meat grinder so many traders have complained of lately, the same one that has knocked so many out of the game-just read the StockTwits stream.

 Take away the dates and you probably would have no idea what the trend is. Look at some of those red days, huge moves down, huge gaps down, some of the white days are the opposite, but is the trend VERY clear? This is why I say Wall Street won't make it easy, they want as many people as possible to be wrong on any given day.

The same trend with some context, it's up and you might not appreciate how difficult that move up was from the head fake lows unless you really look at each day individually and think about how you would have felt going through 6.5 hours of that action and not knowing what the next day would bring intraday or on the close, so as I said, Wall St. isn't going to make it easy.

This is why I stick with the probabilities and why I mentioned Jesse Livermore's (widely considered to be one of the best stock traders of all time) key to making money yesterday, "Not being right, as many were right, but sitting" or having the courage of his convictions.

The probabilities... They have served us pretty well as we shorted out main positions at the market top and opened hedging long positions at the market bottom, now what are they saying?

You can see the accumulation at the May lows on a bear trap/head fake move, then prices trending higher and a negative 60 min divergence which is the process (not event) of Wall Street selling accumulated shares in to price strength/demand which they need unless they want to sell their shares quickly for less than they bought them for.

However, this is what I mean when I say, "Wall Street isn't going to make it easy".

Luckily we've had some good success in even navigating charts like the first SPY chart, it's just been a matter of using the right tools. Now we are gearing up for that move to the downside in a little bigger size than we have used over the last few months of chop, as Livermore said, everyone can be right on the market direction, but how many can sit long enough to make money?