To start off Tuesdays thoughts, once again I think these two videos are a solid reminder about the diversity and flexibility one must have as a trader, or any financial market participant from my perspective. First the video reminding you about patiencewiththe Stock Market Trading and Analysis for 1/06/2009 videothen the video prepared for Monday’s session which also showed that opportunities come to those who wait for the right trades at the right times for the right reasons at Stock Market Trading and Analysis for 1/12/2009

We’ve heard time and time again this past week from several people who’ve said they’ve stayed out of what would have been losing trades for them historically by waiting and not jumping in with the lemmings as they’re panicking about price action. These are learning opportunities that should not soon be forgotten!

As I’ve already explained in the second YouTube video above what I’m seeing in the Dow daily chart I’ll move into the rest of the commentary. First thing right out of the box, you’ll notice support and resistance levels are starting to tighten, reducing the wiggle room. As I’ve taught in the past and we’ve seen in action, this typically means more wide range bars are coming soon! In the short term this can and is meaning tighter ranges between opportunity levels. This is a phenomenon that can take weeks to build and has certainly started already the last few weeks. So as always, I never bet “today is the day”, I let my support and resistance levels and price action be the deciding factor for my trades, not my opinions.

As we go into today, you’ll note we’re now below the critical 875 – 880 support band, and it’s now decisive resistance. Accordingly, nothing has changed with how to play this particular band to the short side. The bias going into today is to the downside until such time that we have an aggressive two bar break of 880 as taught in my free chat room. Learn more about the chat room in my blog.

At current levels 865.50 as of 8:50a.m. ET, to go short for anything more than a quick trade, I’m looking for a decisive break of 857 today’s S1 Pivot Point. This also allows us to clear my 858.50 level as referenced in my key weekly levels. If that break happens, the next key support areas will be 853 and 850.50 so I will be keeping those in mind for my scale out strategies. A break below the 850.50 will likely lead us to 846, today’s S2 Pivot Point on the S&P E-mini.

To start out this morning, to go long even for a quick trade, which is countertrend based on the position and direction of the key moving averages, I need to see the break of the 871.25 level (today’s Primary Pivot) as it is so close my key 870.50 level. That trade will likely end as we approach the critical 875 – 880 band. If we break 880 I will post updated commentary in the chatroom! Again, keep in mind, several weeks ago we had a lot of wiggle room between levels of 10+ points or more. That’s now tightening due to the consolidation which from my perspective precedes the upcoming wide range bars.

In closing, today, as always, for trend traders, keep in the back of your mind the 20MA’s location and trend in relation to your impending position! Also remember the strength of the 875 – 880 band with open short positions. That’s what I will be doing as I think about my intraday strategy!

Robert was recently a featured speaker at the International Traders Expo in Las Vegas and has been asked to speak at the Traders Expo in New York in February 2009. So mark your calendars now for another great opportunity to learn firsthand fromhis deep trading toolkit.