Emini Day Trading Diary

5 min Emini Nasdaq 100

Hi,

Market gapped down by a little today and as expected it closed the gap... I did not participate in the gap closing trade because price action was choppy and the general direction is still down... I would prefer to short rather than long...

My chance to short came at around 14:50 when price formed a mini double top... price seemed to be experiencing alot of resistance from the moving averages and I shorted 1 contract at 2086, my stop loss was at 2091, pretty tight as I was not willing to risk alot of money on this trade, basically price has to break several layers of support before going further down and we can see that downside potential was limited...

Price broke through the support formed by the opening price in a huge red candlestick... I was tempted to short another 2 more contracts but cautioned myself to the limited downside ... I decided to play safe an exited at 2075 with $220 profits.

Fundamentals:
Stocks finished a bruising week on the downside Friday after a jump in consumer inflation raised concerns about how much freedom the Federal Reserve has to continue cutting interest rates. The Dow Jones industrial average gave up more than 178 points.
Concerns emerged after the Labor Department reported its consumer price index had a bigger-than-expected jump for November, with large increases in the cost of clothing, airline tickets and prescription drugs. That raised questions about the Fed's options for priming the economy.
Policymakers this week lowered interest rates and announced a plan to align with other key central banks and offer loans to pressed lenders around the world. But while it wants to stimulate the U.S. economy and make lending easier among banks wary of faltering debt, the Fed also has to keep a watchful eye on inflation.
Robert Dye, senior economist at PNC Financial Services Group, said the economic readings this week painted a mixed picture for investors, spurring some of the market's volatility.
"If you take the stronger-than-expected economic data we saw this week in the form of retail sales and add to that the inflation data and then combine that with a somewhat ambiguous statement from the Fed, you get a picture as clear as mud," he said.
Friday's report on inflation follows a reading Thursday that showed the biggest jump in inflation at the wholesale level in 34 years.
The 0.8 percent increase in consumer prices topped the 0.6 percent rise economists had been expecting. The report also showed so-called core inflation, which excludes often-volatile food and energy prices, had its biggest increase in 10 months, rising 0.3 percent.
Dye said the Fed could be proven wise for cutting interest rates by just a quarter of a percentage point Tuesday rather than by a half point as some investors had hoped. Stocks fell sharply Tuesday after the Fed's rate decision and staged a partial rebound Wednesday after the Fed announced its liquidity plan with other central banks.
The uptick in core inflation is unnerving, Dye said, because it makes it harder for the Fed to justify further rate cuts.
Also Friday, the Federal Reserve said industrial production rebounded in November, increasing 0.3 percent after a steep 0.7 percent decline in October. The increase came in slightly ahead of Wall Street's expectations.