Recognizing a Range Bound Market: Key to avoiding the Chop

After the first hour of trading, it is clear that today is a range bound market with a high likelihood of chopping up anyone who attempts to trade it (unless your trading method is geared specifically for this type of market). I've made only one trade this morning, only because there is nothing to do right now. I've got JPM on my radar as a long and GG on my shortlist, it's just a matter of them properly setting up for the trade.

So instead of trying to trade and getting chopped up I thought I'd post about how I attempt to recognize these types of day. Learning how to recognize this type of poor trading environment and keeping myself out of the market when it's like this (sometimes that's the hard part) has positively affected my P&L way more than anything else. You can make some killer trades when conditions are good but it's all for nothing if you just end up giving all your profits back when the chop fest begins.

Ok, here's what I'm looking at this morning:So that's a pic of a choppy market that is likely going to continue to be range bound. On a good trading day, you want to see the opposite. The watchlist should be mostly one color. The line charts for the advancers/decliners, up volume/down volume, and VIX/SPY should all show the lines heading in opposite directions to indicate a trending market. Today they're just crossing back and forth over each other...a sign to go post on the blog instead of trading.

Another indicator that helps is the NYSE TICK. This indicator shows the NYSE stocks that are making upticks vs. downticks. Readings between -400 and +400 are generally considered neutral. Everyone has their own take on how to use the tick and what levels are important. I look at +-1000, 800, and 500. The other thing I do is keep an eye on whether the majority of the ticks are in the positive or negative zone. Having a moving average helps as well. Here's a chart of today's 2m tick chart:As you can see, today's tick chart has been all over the place. That's all I've got for now, hope everyone had a good weekend.

TLT

***Update***
The market literally broke down right when I hit the post button to publish this post. I was able to catch a piece of the GG short that I had planned (short below 39 with a profit target at 38.50). Unfortunately there is not much follow through for shorts right now as the market has been in an uptrend lately. Thankfully I grabbed a piece of the sell off, I just thought it was funny that the market sold right as I published the post about the market not doing anything.