We offered the E-Mini Nasdaq short at 1615.00 yesterday, and although that hidden pivot offered daunting resistance throughout the day, we ended the session with no position. A case of cold feet? Definitely not. I’m as eager to short the market at these levels as you are, but only if we are able to initiate a position on our terms. On Monday, I’d specified that the short offer be left in until 10:30 a.m. Eastern (9:30 a.m. exchange time). As the morning unfolded, this plan of action might have kept you attentive, since the first thrust of the day, at 9:03 a.m. exchange time,  pushed the futures to 1614.50, just two ticks shy of our offer.

However, it wasn’t until after our time limit had expired, at around 10:24 a.m., that 1615.00 was actually touched. This prompted several subscribers to e-mail me intraday, wondering whether the short could still be attempted. No, I responded, you should let the trade go. Of course, when the futures ended the day at 1613.00, I received a couple more e-mails second-guessing my unwillingness to jump on board in the first place. 

I frequently specify time limits on orders, so perhaps it’s time to explain again why. In those instances where I caution against trading during the final hour or two of the day, my reasoning should be obvious. Since we are mostly day-trading futures contracts and take longer-term positions only at prospectively major swing points, we should try to avoid getting stuck with a position at or near the end of the day. This is just common sense.

Caution With Your Coffee?

But what about trade orders that I tell you are good for only the first hour or two? My reasoning in these instances is subtler, more subjective and more complex, and it boils down to guessing how strong a trading vehicle will be in relationship to a particular hidden pivot at different times of the day. If the pivot represents a modest rally target but still takes 90 or so minutes to reach, we can speculate that the rally itself is not very strong. In such circumstances, the pivot would be a more appealing place to go short than if it were to be impaled in, say, the first 15 minutes of the session. In the case of yesterday’s NQ advice, I specified getting short during the first hour for the opposite reason – i.e., I didn’t want to short the kind of “quiet” tape that would have used up more time getting the NQ to its projected swing point.

To summarize: When I make specific trade recommendations, I often treat hidden-pivot targets as time-sensitive because the stock market is stronger at certain hours of the day than at others. To the extent they tend to provide support or resistance that is clearly discernible, hidden pivots usually “work” no matter what time of day they are hit. However, that doesn’t mean that our odds of profiting from a trade will remain constant regardless of the time of day we use these swing points.