I'm back

...and awoken from a long blog-slumber.  Better still, I have today's trade to share with you.  Of high interest to me was the fact that Jim Dalton himself took the same trade, and for the same reasons.  This is one reason why I believe taking the Intensive class with him was so beneficial, you really do gain a whole new perspective on the market, and slowly start to dump all the previous junk that never really worked that well anyway.  Dalton is much more eloquent and descriptive than my limited patience in typing things out, so I'll him explain the highlights for me here (fast-forward to the 6:40 mark).

Now let's look at the market through my eyes.  First, the tick chart showing the market's pulse this morning:

Two critical day-timeframe references (in purple) & step-by-step explanation

...and the important context coming into the day:

Previous RTH session profile & Daily RTH chart (poor/thin structure outlined in purple)

Okay, let's put this together.  Context: we're continuing a rally off the lows, but the market is going too far-too fast.  Additionally, yesterday saw a high-potential opening (huge upgap) that then fizzled out, with the market unable to see convicted follow-through buying.  This is what didn't happen, which given the context is important to note.  What did happen was grinding rotation, resulting in a very prominent point of control at 2038.  So it looks like the big upgap wasn't met with enthusiasm come the US market open.

Now we come into today, and see yet another gap.  Context: a day likely to be filled with huge uncertainty and volatility as the big Fed announcement will be released this afternoon.  Combined with yesterday's weak follow-through, and the minuscule size of the opening gap (2 pts), I'm not convinced.  I want to see the market struggle to make a new high above the overnight high, signaling the buying is over.  This occurred in step 1. Step 2 shows the lack of buying a bit clearer, as it falls back into the overnight range, bouncing off a day-timeframe reference at the open.  At this point I have all I need to go short - multiple reasons including inventory imbalances, a place to enter, and a place to put my stop that is close to my entry (the highs). Step 3 shows my sell at the overnight high, still a reference at this point.

"Eric, why in the world did you exit at a reduced profit!? Look how the market ripped down to the previous day's prominent POC - you could've DOUBLED your money!!"  Simple: I'm not going to push it on a day like today.

Any other day I would've been fully committed (like usual) to the trade, patiently waiting and being increasingly rewarded for it. But not on a day like today - there is just too much going on that can rip the rug out from under me with the speed of lightening (thanks, algos).

Additionally, there was some weakness I saw developing as the market went down.  As the trade progressed, you can see on the tick chart price rallying to weak references before falling again - namely 49 (half-back at the time) and 48 (the open).  That, coupled with the extreme difficulty the market had filling the gap made me very uneasy, as if I wasn't uneasy enough already taking risk on a big Fed day like today.  I'm perfectly happy to put 5 points in my pocket, step aside, and then watch the chaos going into the announcement.