I’m going to keep this mornings letter relatively short in an effort to get to opportunities. But before I do that, I want to start this mornings letter with a note from one of my favorite traders of all time.
I have always used this as a “self-check” when we have mornings/overnight action like this morning. And honestly we could be up 3.3% vs down 3.3% and the same thing holds true.
“The human side of every person is the greatest enemy of the average speculator.”
- Jesse Livermore
The last 18 hours has “gut-checked” every trader/investor and market participant.
Hundreds of billions of dollars have evaporated from trading accounts to those that overtrade, don’t have a plan, don’t use rules, and don’t take profits when they’re due.
It is my purpose of ESDaily to eliminate all of those.
So real quick, let’s recap yesterday:
April 2 - 0 Trades
Here was the daily action:
Here’s premarket:
Here’s end of day:
After being down 1% early in the day, traders use the magnet 5620 I’ve talked about so much as a bottoming between 8:23AM and 9:30AM EST.
I wrote in April 2 Levels and Gameplan:
This is what building structure looks like before the next leg.
As you can see, 5620 is a MAGNET
Something I’d like to point out I said yesterday that I repeat this AM…
In between the purple lines, you’ll see the words
Critical area that much hold for bull hope”
Interesting to see the low Monday at 8 and 9PM bounce from there and again this morning.
That is the reason we:
Leave critical areas on the chart (for a period of time)
Use critical areas as odds enhancers if we have additional support.
This is the staple example of a “price magnet” or when support turns into resistance or vis versa. We typically can see price use these areas 4/5 times before we move away from the level.
This is the 4th use here this AM. We saw the price consolidate and break the level Friday at 3PM. As ES found a bottom at our 5545 entry and took off, we tested the lower bound yesterday (after the morning rally) at around 1PM. Then we used it as support again at 9PM and now at 7AM.
We continue to use 5620 as a magnet
That level held for a 5th time and markets had a glorious day for bulls. After bottoming at 5010 and reclaiming 5620, we rallied to 5636, pulled back to 5675, before reaching a high of 5773.
Throughout the entire day, I held my runner from 5545, with a stop moved from 5585 to 5600, and ultimately 5665.
Here’s my notes throughout the day:
At 1:11PM I wrote:
At 1:11PM we found a high inside the 5734-5748 level at 39 and sold off to 5673, a 67 point sell in 1hr 15 minutes. We double bottomed at 5675 before ultimately reaching a 5773.25 high at 4:15PM.
We actually blew thru 5700, all the way down to test Wednesday 2:30 AM high and 11:15/11:50AM low at the 5675 price.
We “quadruple bottomed” inside this level, started diverging inside the 15 minute demand zone seen below and that was all she wrote:
That is until 4:17PM when price tagged the 5771.50-5783 Supply area noted on the chart as a MAJOR Fed Test area highlighted in pink here: 45 Min Chart For Reference.:
In quick order, bears sold, bulls sold, on Trump’s Tarriff announcement.
Quick notes here:
* EU will be 20%
* China, will be levied an additional 34% on top of the 20% in place— bringing its new rate to 54%.
*About 60 countries will see tariffs higher than 10%
Mexico and Canada already have their tariffs in place and were spared additional levies.
Several countries have signaled that they will respond to Trump’s tariffs, and many international finance and commerce secretaries are accusing Trump of creating an absolute global trade war.
Markets didn’t like any of it.
As I type, markets are off 3.62% from yesterday’s rally.
Remember:
Liquidity brings Volatility.
Volatility brings Opportunity
Our job is to wait.
Only take the Grade A+ setups on ES.
Welp, we got the volatility.
At approximately 4:39PM EST we knifed down and 5591 offered a reclaim buying opportunity after acceptance occurred, and I took a small partial long here saying:
When I wrote “level went further then desired” it means on a breakdown and reclaim, we typically want price to go 7-13 points below the level we see (in this case 5691), but since we went all the way down to 5675 below before we rallied back above the 91 triggering the entry, included risk was there.
Here’s a 1 minute chart for reference, because things moved so quickly:
While we caught a 9 point bid within a minute, price ultimately came back down to stop me out for a 24 point loss on a 40% position, or 9 full ES points.
Cheap/ low risk trade.
Thankfully, the rules we use and stops/position sizing helped us.
As price opened 6PM, we cratered.
A low of 5481 was put in place at 6:21PM EST and we’ve oscillated in a wild 70 point range overnight with 66 being the high:
That’s what happened, now let’s get to where we’re at this AM:
Here’s Where We’re At:
ES Scoreboard
I spend most of my day examining ES and finding lines of support and resistance and have those marked on my chart as areas of interest. They are the same levels I share with ESDaily readers in the section below.
My job isn’t to predict where price is going:
It’s to take Grade A+ setups, and get out when I’m told I’m wrong.
The end result on this “idea” comes from our Core Strategy here:
#1 No more than 5% risked on any single position. Non negotiable.
#2 Nothing less than a 1/1 reward to risk for T1. Non negotiable
#3 I do not get to decide where Targets are. It’s just shy of next level resistance
#4 60-75% of contracts are to be taken at T1
#5 10-15% of contracts are to be taken at T2
#6 Always leave a runner if permitted
#7 Limiting number of trades
Above outlines the “reasons” we’re able to capture gains quickly, and keep our win rate high. We have no idea where price is going next (esp today :-), our job is to take great setups, take profits quickly, and scale out.
***New Reader’s Please See This Area***
Core strategy, rules - Rules are important in all aspects of life, but never more important than in the life of a trader. The objective is to use the areas we find as turning points, as we seek liquidity…. and trade with institutions. If you’re new to ES Daily, you can find our core strategy outlined here where I detail out the type of setups we look for here at ES Daily: https://theesdaily.substack.com/p/es-dailys-core-strategy
Here’s the news data that may matter this week:
Not much in the way of news to break us out of this one way or the other this AM but we do have a solid week of news:
Thursday April 3: Unemployement Claims 8:30EST & ISM/PMI 10AM EST
Friday April 4: Average Hourly Earnings Non-Farm Employment ChangeUnemployment Rate 8:30AM
Keep reading with a 7-day free trial
Subscribe to ES Daily by PriceTrader to keep reading this post and get 7 days of free access to the full post archives.