Pre Market TAO Mon 7-13-09

ES Futures are testing their 881 high resistance area ...
gold / crude down . Us Dollar flat to up.
At the open SPY gaped up and has quickly sold off down to Friday lows so .
tick is neg -800 ..
Sectors are mixed.
I f this low holds we may see another range day.
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10:44 et am .......back at top of range entered short spy 8850
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1:49 et pm ....nice bounce off the bottom ...I have to confess I was not properly prepared to trade this am....had internet trouble and finally got it up 15 min before open.... this trade goes to show if you're not repaired.....don't trade!......I missed the double bottom the ES futures put in over nite and hadn't looked hard at the US Dollar activity overnight either. If i had invested a little more time in analysis, I would have caught it . On top of that, my Nyse feed was not streaming in properly. But i assumed the day would be a range . BOY ! did I screw up! So this trade turned in to a loser so far. Sectors have traded uo into last weeks upper range but are starting to build divergence . xlf has been the big leader today but on ever decreasing volume from open . half the sectors are starting to show signs of over bought as well... this looks like a C wave 138% of A wave but if it gets above 162% it is most likely a wave 3 to the up side. So we wait .
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close.... Well I have to say I completely missed the buss on today's session.. but as i have said before trading is all about managing risk (hiding behind good market structures for stops is one key protection strategy ) and appropriate size trade position amounts. I have been trading with a (1 size / 2 X / 3 X) scale in approach with a stop above the closest structure I don't think the market will go beyond that day.

Today was no different except at the top of the daily range 8850 with a stop above 8900, I took a 1 position thinking we had a range day. To my disappointment it moved against me. Abruptly!

The market moved quickly to the stop and it looked to be a reversal point so i took a 2 position thinking we have a range top of Friday . The next stop point 9011 is the last week high and the top of a very extended wave C. Could price go there? In a down trend not so likely. So in I jump in deeper.

At the close, Spy is at the top of last weeks high and the top of a very extended wave C almost ready to be a wave 3 .. today was a big day. Could it go higher? Yes It can but every sector now looks very over bought and extended for today ... It looks like we will get a turn down in the AM so I decided to move in with the 3 position and a stop just above the close 9010 .... so if the market opens up with a gap up then I'm stopped out at an average account loss. But if the market opens down and follows through , the loss will be less or even to break even.