Commentary

Year of the Oreo

Micro ES Monthly

Recently I read an article that said you can’t do well trading longer time frames unless you know how to day trade profitably. I don’t know if that is true but it is worth thinking about. Everyone knows how to break even day trading, just do nothing.

On the monthly micro ES chart, note the bull reactions off the withdrawals from each of the triple tops. This last one was the sharpest and quickest.

May saw the first intermediate pullback of 2019. The initial rally went from about 2350 to 2950 or 600 points. The pullback stopped at about 2750. 2750 + 600 = 3350. This could actually happen.

From the less optimistic point of view, only one of the previous eight months (April) has not traded below the 13 month moving average. There is an excellent chance that this area might be the top of a multi month trading range.

MES Weekly

Note that the current price is above the upward sloping 13 and 52 week moving averages. The same situation is true for the 13 and 39 month moving averages. The rally paused at the 13 week moving average.

MES Daily

Last week, the rally paused at an excellent place, above the 54 day moving average and above the congestion from last autumn. Ironically, QQQ and NQ paused just below the 54 and the congestion.

Micro NQ Daily

Guess that is why ES gets all the Father’s Day cards.

Circling back to day trading, the action from the beginning of May seems very difficult. At the bottom, I wound up long 2 MES contracts at 2860 and 200 SMH at 100. The MES contracts were down over $1000 at the bottom which would have been over $10,000 had they been e-Minis. It is critically important for a trader to know how much heat can be tolerated.

I sold the MES contracts at 2880, and then managed to buy a MNQ contract at the worst possible place in the whippy action on June 11 and had to deal with an over $200 pullback during the consolidation. Again, had the position been an e-mini NQ, the draw down of over $2000 would have been unacceptable.

Short Term Outlook

I sold my MNQ contract today for a $200 profit. I don’t want to be long going into the Fed tomorrow after today’s exuberance. Also I’m not sure what exactly happens in the futures cash settlement this weekend except I bet they will charge me something.

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