Pivots, Patterns, and Intraday Swing Trades: Derivatives Analysis with the E-mini and Russell Futures Contracts, + Website

CHAPTER 6

The Work-Done Concept

The intraday trader's view of market action is admittedly narrow. In fact, investors and advisors to investors who buy and hold stocks and mutual funds would consider the trends of the intraday action as no more than noise. But anyone spending serious time examining the action in the lower frames of the stock futures indices finds as much order there as a scientist might find examining nature through a microscope. Even if the exact underlying principles remain a mystery, a repetition to market behavior is unmistakable. It's on such repetition—and the leverage afforded them through exchange-regulated futures derivatives—that intraday traders capitalize.

Only in rare moments does the market take a direct route to any destination. It gives, and then it takes back. And after it takes back, it gives even more. And yet all along the way, if one examines the main index contracts closely, the market leaves signals not only that it's finished with one direction, but signposts in its wake so that when this next push onward also finds an end to its trend, price action will know how and where to find its way back to some part of the journey left behind. In an earlier chapter, we described one of these telltale signs, the Break-away Pivot, as a piece of unfinished business that price may want to revisit sometime before getting on with its larger underlying destiny.

The Trader must acknowledge that the market often sees itself as called back to such things as ...