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After Hours Report:
It was hard to get back in the saddle of this journal after so many days off. It is very easy to slip back into the path of least resistance. And that, by default, is avoiding activities that are uncomfortable. But I survived and learned a lot today as a result.
It can be really hard to not fight trend moves -- especially ones that spawn via benign openings and sediment. My biggest accomplishment today was to have gotten burned on my 1st long idea and then quickly realized that momentum was unusually strong and to not fight the trend anymore until clarity of structure was more apparent.
I'm disappointed to have not gotten long later in the session when it was clear that momentum was waning and that that the market had stopped going down. I will address the metrics that clued me into this structural change via chart annotations.
NYSE Volume: 4,468,000
Globex Session Visualization Guess: Up
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8:30 --
Structure - Our first analysis is 1 hour later than usual. The daily is in a four day downtrend. Initial balance value was largely unchanged from yesterday but slightly lower. Initial balance closed below yesterday's lows and the overnight session lows. C and D periods have slowly grinded slightly lower. Of significance, price is right at the 50 day moving average. Thus far the move down today has been low confidence, with a series of very strong negative tick readings that have not been paid much for their efforts. Intermarket themes are mixed. Bonds are a strong trend higher while the dollar is flat and the Euro is very low confidence slightly down.
Visualization & Odds: I visualize this market bouncing at some point today. But so far it is one time framing, so the trend has to be respeted.
Tactics: I am on watch for a buy response here at the 50 day moving average. I am very interested in buying here due to the strong low of the day tick readings -1200. This market just does not feel as though it wants to trend down today. New lows print by a tick here at 1367.50. 8:37 - more new lows, looks like our long idea was pre-mature. Sediment is in a steep decline as is the tick moving average. No significant divergences to note in the SP sectors. Apple is up today, so the nasdaq is diverged. But apple is in a world of it's own, so I discount this metric. Our long idea stops out, and we will let the market form more of a transitional structure before considering re-entry. This trade failed due to the market clearly showing it's hand that it still wanted lower prices. It's logical to expect a 50 day MA response, but you need that reference to be tied to some obvious tactical entry signal. Your entry was rather "blind" in nature.
NYSE Vol:975k
Sector Skew: Only 5 green
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Grade: B. The most glaring mistake was my failure to address the fact that the Initial balance move below yesterday's lows was a breakout of the multi-week balanced zone. And that a break out with strong momentum could very well keep going. One of the art forms of successful trading is properly assessing if a tick extreme is exhaustion or signifying the entrance of large participants and the beginning of a continuation move. Obviously today it was a sign of continuation. I also failed to consciously acknowledge that tick had not registered a reading above positive 500. This is a nuance that I'm going to carry forward. If that tick is unable to register a positive 600 reading, then negative tick extreme readings will not be considered exhaustion.
The trade taken was sub-par and didn't have an explicit entry signal. Or even a decent divergence to hang my hat on. The TICK distribution alone should have kept me out of thinking long side and considering continuation shorts. I liked how I could not find ANYTHING to justify my entry long beyond the 50 day moving average. What I'm learning is that successful trades do a lot of talking. There are a lot of structural cues pointing to change. Today, nothing really pointed to change. Rather, all signposts were signaling continuation.
This was a great learning day to journal. It really helped me to internalize the nuances of a big sell day. These are tough to embrace when they happen so infrequently.
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9:00--
Structure: TICK -1400 readings now hitting as sellers are really piling on. The day's 1st true elongated spike prints just after 9:00. Sediment is now -2000 extreme in a straight-shot decline from it's opening neutral reading of near zero. This could be the stops being run under the 50 day. Dollar finally popping and bonds continue to trend higher. TICK MA reading is -800 now. Have not seen it that low in quite awhile. Apple finally joins the party and prints a puke bar too of 5 points.
9:15: A strong downtrend is in place now with, TICK seriously negative. Our 1st excess tail at 1356.75 and minor tick divergence.
Visualization & Odds:
Tactics: If you were to try a long, here is where tactically it would have made more sense. It is very uncommon these days for major reference to not be stopped gunned. If fading the trend and trying a reversal entry it makes more sense tactically to enter on an expansion bar.
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Grade: D -- Your focus was so poor today that you didn't even take a shot at visualization. Overall, you were out of balance and had poor focus, mostly due to talking on the phone instead of engaging. It's interesting to look back at how I was feeling during this time.
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10:30--
Structure:Just before 10:00 now and fresh lows again. Very smart and logical to have ditched any and all long bias for today. Slight reversal here at 1354.25 which is S3 support. Beyond this level, 1350 and then 1334 which is a prior swing low.
Visualization & Odds: Today is tough. It could trend down all day. Or it could bounce hard come 11:00 or 12:00. I'm going to go ahead and give trend down and close near lows high odds 80%. 20% that it bounces hard. If the TICK is able to print multiple plus 800 readings then the trend day might be in jeopardy. But as long as all of the readings stay below 600 then there is no reason to out think this down move.
Tactics: Forget long trades. On days that morphed into a trend down days, it's hard enough to even identify the trend, and it even harder to not fall into the trap of continuously fading the trend.
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Grade:B -- Would have liked a more robust structure analysis. Especially to note the momentum peak at 9:00. And just throwing in the towal on long trades was not particularly sane analysis. A three hour base at lows with increasing momentum and a minor low rejection was game on for a potential long trade.
But you can't out think the fact that your odds assessment was spot on. That's what it is all about. Odds. The power of this journal is to document your success/failure at odds assessment.
You were just not focused today. It is very interesting to be writing this while contemplating how I was feeling at this time of day. And comparing that to how I'm viewing the market action now. Very interesting.
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