July 8 2010 Overlay and Trades

I prepped for a correction off 1063.00 just after the open but the price continued to grind up.

My premise was off almost immediately this morning and I had to adjust. There was no way I was getting long without a pullback to at least the 1055.50 area.

I started initiating shorts after 1063.00 got extended and the price moved back inside. All 3 shorts were irritating because as soon as I had some level of confirmation on each entry and executed, the price immediately started acting like it was going to squeeze me out.

I stuck with the trades. I just did not believe that the price would continue grinding up without a correction. The short side remains completely ridiculous and almost not worth it in this market even though there have been some good shorts in the past month.

The shorts seem like they need to be hit with no confirmation and held though tough micro squeezes against them.

The last couple weeks has been the first time I have seen any follow through to the short side in a long time. Let's see if the bull move up can continue or if the price will break 1000.00 and make a drive down.

My opinion is that the technical action is strong to the upside even though fundamentally, I have no idea who could possibly be buying right now. What I think fundamentally is meaningless however. I do not consider it in my trading.

The 2-3 exit rule kept me out of trouble today and lead to a profitable day on a day where none of my entries went anywhere.

It seems the more I lock up open equity at 3 or 4 points and look for a re entry, the better I do. However, we will need to see how it holds up after a 10-12 point draw.