(click image to enlarge)
On Friday, the ES bears achieved a short-term buy to cover partials signal at 1088.75 (see image above). (note: S&T shows last 24 hours of futures data to build the price bar, which is why ‘today’ still appears in the text of the image above)
The initial ES sell short signal was generated on January 21, 2010 at 1127, so ideal partials netted +38.25 on that trade (see Primary Trend text in image above). The remaining core short position is currently +28 with about 4 points locked in.
There is an intratrend counter-trend trade visible on the chart with support at 1088.75 and an upside target at the primary trend resistance line. That signal is intended, however, to show trend following bears where to cover partials and what the upside counter-trend rally might yield against the core position.
My personal preference is to let the counter-trend trades go (in this case the intratrend long trade from 1088.75), but they are shown by Stops and Targets as a reference and can serve as very good risk management guidelines for those attempting to catch a pullback or who are comfortable playing counter-trend speculative strategies. A clever trader looks at the different time frames and builds a personal strategy based upon the overall big picture. The line to watch today (in my opinion) is intermediate primary trend resistance at 1100.25 area.
My basic rule of thumb is that when the trend is bearish, the only buying done is to cover shorts at partial signals or to exit a position on a protective trailing stop. The places to sell short in a downtrend are at snap-back rallies to resistance in a particular time frame.
ST trend remains down below the S&T stop/reversal line at 1123.25. IT trend remains down below 1100.25 (primary trend resistance).
As always…the trend is your friend until it ain’t.