The recent move in ES has been a huge surprise to me, but it goes to show the power of one-timeframing on the daily chart.  I’ve taken several shorts that “normally” would go to the prior low of day but have not.  Shorts have not been paying up for me.  I get a good short and then give it back with a few losses.  My brain remembers the good short and I keep trying.  If I had just traded the long side I would have done much better.  “Now that’s hindsight” you say, but is it?  If we make a strict rule no shorting a market that is one-timeframing higher, many shorts could have been avoided.

What really surprises me about the move is I don’t see much bullishness in the news.  France and other European countries are about the lose their AAA.  The Greek deficit reductions are falling short.  A recession looms that will ruin all the currently overly optimistic budget plans.  The list goes on and on.  The Euro has not been as strong as ES and that’s unusual.  It seems where in a really special situation here where normal statistics and setups may not apply.

Last week was my 2nd losing week in 7 months.  As usual, I let a few losses get too big and unusually, that happened several days in a row.  This week I’m at my average but several trades that would have made lots of money just didn’t pan out and those that did had me on the sidelines.  I find the past 2 weeks has been difficult.

So here’s what I’m working on:

I continue to try and limit losses to 5 pts total which means 2.5 pts trading 2 contracts and if I need a bigger stop I trade 1.  I’ve pretty much kept to that the past 4 days and I’m encouraged as I don’t want a repeat of the large losses from last week.

I need to improve on trading with the trend.  Yesterday I had a good short after the open and was targetting the prior low of day.  What I didn’t realize is that ES fell right into a buy setup for higher timeframes.  I exited my short based on the order flow but I saw the long setup but for some reason I didn’t take it.  Well not “some reason” I know exactly the “reason”, I was not nimble enough to abandon my short bias and I did give the higher timeframe setup priority.  Even worse I re-shorted on the pullback to 54.25 (as I planned, written in my tweets yesterday) and took a loss, giving back half the winnings on the short.

I’m yet again refining my plan.  This has been an ongoing process that will definitely continue.

The advantage to all this is I’m learning a ton.  With the volatility I’m making more trades and that means more opportunities to learn from what worked and what didn’t work.  If we can survive this I think we’ll be much better traders.

Here’s what I’m seeing on the daily chart:

I think we test 1275.25 and I’ll be aggressive on shorts there, and if I can manage it, I would hold a profitable short overnight.  I see us pulling back from 1275.25 and possibly testing the gap area which corresponds to the bottom of my micro-composite.  We may make it to 89.25 but I’d be surprised if we do that without a pullback.  But a lot of this depends on the news out of Europe and the spin they give it.  We’re nearly the top of the micr-composite.

Here in France there is talk of cutting budgets even more.  France is determined to keep its AAA but the reality is France may have already lost it.  France is a very socialist country (as most European countries) and the healthcare and unemployment benefits are taking its toll.  France can’t afford it.  And France can’t afford to rack up more debt.  So something is going to have to give.  The French take to their “rights” so if they do reduce benefits we’ll see lots of protests.

All of this has me thinking this is playing out exactly as those in charge want.  The idea is simple:  Lend a country so much that it can never pay it back and then you own that country.  The problem is this could spiral out of control and there may not be anything left to own.  And they don’t want that.