Tough to trade on Big GapUp Days
November 19, 2012 1:30 PM

One of my rule is to NOT to counter trend trade on big GAP Up or Gap Down days. Today (11/19/2012, Monday) ES gapped up big (11.5 ES points) on the news of potential fiscal cliff solution. Overnight markets traded higher. These days are usually difficult to trade as markets gaps up or down in a hurry and trade side-ways for the rest of the day. These are the days I am more careful to NOT counter-trend trade and trade most of the opportunities in the GAP direction.

Today (11/19) Gap direction was UP. Around 10.30a, I started seeing CMI red bars signaling side-ways to mild down side trend. From open I was waiting for a CMI Green bar (UP) with a potential long trade setup (same direction as GAP up). I have not seen any setup until 1:30p. There were some scalp opportunities in the downside direction, but I refused to trade Shorts on a big Gap Up day.

CMI5 did great job today signaling RED bars and keeping me off the random LONG trades. I’ll wait for a clear Pattern setup in the direction (UP) of gap today.


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