Logged back in to see the unpleasant surprise. Today's action is an exact match of what Jessie Livermore called the "danger signal" or "one day reversal". Price makes a new low, closes above the previous high, volume greater than the previous day
I'm a big fan/student of Livermore. You sum it up very well. Look at the ES, for example. Last week we had two huge up days (10/3 & 10/4).
But look at the volume on those two days. Both days were below the 10-day average daily volume and well below the volume of the two previous down days. However, as you said, look at
today's ES volume. Today's volume was immense compared to last week's up days, and it was even slightly higher than the big 9/13 key reversal down day.
Price and volume really trying to tell a story if you ask me. If there is a reason to be cautious as a bull (besides the obvious fact that we are in a bear market) it is this: On the weekly ES, this week's volume is still lower than last week's volume and we would need a phenomenal number of contracts to trade tomorrow to come close to the volume traded in the recent red weeks.
And days like this are the reason I evolved the "take profits and run" mentality in the first place.
Days like this are very few and very far between. If you enter and exit right, you will never manage to sell the top or buy the bottom. I was watching from before the open right through the first 30 minutes and I somehow was in a daze, flat-footed. Finally, I woke up to what was happening and closed my SPY shorts at $353 and change, and then longed at $352.50. So more than 5 points off the bottom before I acted, and I was actively watching. I just checked and my SPY trades went off between 10:06 and 10:08. Covered the shorts. Then had to run my calculation on current equity to size the new long. I will say that I am not at all upset that I "left 5 points" on the table," which is actually 10 points when you figure if I had stopped and reversed closer to $348 instead of $353. I am glad I held my shorts overnight and through the news volatility so I could capture the extra points I did catch.
I like you journal and I believe that if you work on your swing timing and hold for larger pulls you'll be richly rewarded.
I was almost sleep-walking through it until I finally got with the flow. To be fair to myself, I was working a TSLA position for the first 30 minutes and that is how the SPY action escaped my brain cells until after 10AM. But to be honest, that is also me making an excuse, because TSLA's action should have had me look more closely at SPY.
Almost an epic fail!
