Posts Tagged ‘Dow Jones’

Scalp Traded The NASDAQ Emini’s Today

Monday, June 14th, 2010

Today is Monday, June 14th and we had a little reversal after a nice run up of 16 S&P points.

The market ran up on the open as it continued from its night trading move higher only to top out and pull back to end the day flat. The Dow was up over 100 points and actually ended the day slightly down -20 points.

I think the move was just a move off of some new resistance levels that were touched. On the S&P it came within a few points of that 1106 resistance number that I have talked about and only now becomes even more clearly defined. The Dow is facing the same kind of resistance once it hit its high in today’s session.

Over the weekend, I looked again at all the charts that make up the Dow Jones Industrial Index and I would have to say, that what I am seeing does not look good. I do see a push up as we are making happen right now and likely over the next week or two, but I do see resistance at those middle numbers I put out yesterday, 1122 to 1142. You can pick the middle of those two and say 1132, that would be the average. I am pretty sure we will see the market trade up to those numbers and I can not help but see weakness in the charts that say, we go down pretty big. It may not be a long drawn out thing that lasts till the end of the year or something, but a big move down to around 8800 -9000 Dow at the best and then a possible big move up, taking out our most recent highs.

That is a bold prediction and I am not sure how it is going to coincide with the sentiment numbers, but that is what I could easily see happening. The first move is now up a bit over the next week or two and then a sharp fast drop down, enough to get everyone and there mother to throw in the towel and get bearish, just as we get a short squeeze back up. This is an election year and I don’t think the “powers that be”, wants to let this market tank down to new lows. The first two moves, up slightly and then down big and fast. The last move, we will have to see, because I am a roaring bear long term, but later in the year or early next.

If things change, I will update and show why it may be different, but I look at the charts as if I was looking at a tick chart of the S&P and or any other trading instrument and it just looks like that is the way it is going to go down, no pun intended.

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Today’s trading was pretty painless, as I just picked up a few scalp trades as I saw them. All winning trades here today and did scale out with size as I kept trading. I did not want to dig my way out of a loss by taking a loss with size on it. I was going to stop, but one way to keep trading is trade smaller size, so your draw-downs will not hurt your efforts much to that point.

Later in the session, I decided to try and trade the NASDAQ market and see how its movements are. I have picked one chart below, the smaller time frame to show you the trades I took in it today. The first trade was a loss, but picked up several trades in a row after that, pretty good. I was trying to trade both ways as you can see in the chart below. Down, up, down – that one I missed, but was a good trade, then up, down, and finally up.

I don’t advise this kind of trading for most people, but I did it today. In the last 50 minutes of the day, I took all the directional moves except one, which got away from me and did not chase.

I took most of the trades at the market, because I was not familiar with the fills and it was just easier to go in at the market. The one trade that was not a market order was the one that got away.

The NASDAQ market is a smaller size market. The S&P is traded in .25 points and there are 4 quarters that make up 1 point, which is $50 or $12.50 per increment. The NASDAQ also moves in .25 or quarters and 4 of them makes up 1 point. Each tick or .25 point is $5 dollars for you or against you and 1 point is $20 dollars. I think a 9 or 10 tick stop is good when trading this market and may even be giving yourself more room on the trade when compared to the S&P. That would be $45-50 dollar stop per contract traded. If you can hit an 8 point move, that would be 8 x $20 x 3 contracts = 160 x 3= $480.  Your risk if 9 tick is 45 x 3 = -135 and that is pretty good. I do like the fact that you can have a 9 tick stop and 10 tick target or higher and get the commissions taken care of, because of the smaller increments.

Even at times if you are scalp trading and going for one to one, that is 9 tick stop and say, 10 tick target or 2.50 points for $ 50 x 3 (contracts) and $ 150. Your loss is the same and your gain is the same. You are not looking for a home run here. If you pick up 3 of those little moves, you have a nice wage for the day, but that is just scalping a small piece here and there.  My trading method can definitely do that and more for those interested.

I never got to the lesson on “Day Trading Goals”, and again got on about something else. We will try again tomorrow.  I hope you enjoyed the new information on a new market. This can be done on stocks as well, no problem and if anything,  is easier to trade than the index futures. More on new markets in the coming days, stay tuned.

Good Trading to All.

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Glossary

Thursday, February 25th, 2010




Common Terms and Definitions Used in E-Mini Day Trading
Show All Definitions | Hide All Definitions

Back Months:
Bear:
Bear Market:
Bid:
CME:
Contract:
Day Trader:
Dow Eminis:
Emini:
Russell Eminis:
Front Month:
Futures:
Limit Order:
Market Order:
Mini:
Stock Index:
Swing Trading:
Tick:

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Beginner’s Info

Thursday, February 25th, 2010

Before you start trading, it is very important that you know what it is that you are doing and what you are trading. It is similar to trading stocks but at the same time, very different. There is a definition of terms for those who need to know the basic language in the glossary.

We are trading the S&P 500 E-Mini Futures contract. This represents a shadow or a mirror of movement in the S&P 500 cash index. Traders and institutions across the globe buy and sell contracts with each other. For many, it is a hedge against a portfolio they own and sell contracts equal to the value of their portfolio as a form of insurance. Pension funds and large institutions do the same as well as mutual fund managers.

They are buying and selling protection in the form of contracts against the Index. To do this they need a very liquid pool of futures contracts to draw from and that is where the trader comes into the picture. He or she may not want to hedge their portfolio, but may want to speculate on the future direction of the market. Traders are an essential ingredient to offer the liquidity that the institutions need to quickly move into and out of the market.

I once heard a man ask a trader what he does for a living and his answer was, “I am an asset liquidity provider, how about you”. That statement is true. That is what we do.

Each contract traded represents 50 times the current value of the index. Lets say that the Index is 1000, a nice round number. Multiply 1000 x 50 = $ 50,000 and that is the value of one contract. If the index was trading at 1100 the value of the contract would be $ 55,000. You need to put up a deposit for the right to buy and hold a contract. If you hold the position over night, you will need about $ 5,000 deposit. If you close the position at the end of the trading session the margin will go down to about $ 1,250 for one contract.(day trade margin)

At Sniper Day Trading, we trade for a modest daily goal most days, between 2-4 points. The S&P 500 emini futures trades in ticks. There are 4 ticks that make up one point. Each tick is $12.50 and since there is 4 ticks to a point, one point is $50, 4 x $12.50= $50. If our daily goal is capture 2-4 points we are trading for $100-$200 dollars per contract traded. With an opening balance of $5,000 you could conceivably buy or sell 4 contract. So to use the example above, 4 contracts traded x 100 to 200 each contract, you would be making $400-800 per day.

We don’t recommend that traders start trading the maximum, but start at the smallest and work your way up. It is possible, averaging 2 points per day that in 4 weeks you could be trading at 4 contracts and bringing in the kind of money above. You can stay at that level or increase it over time. What ever you feel comfortable with. You may decide to go slower and reach that level in 2 or 3 months and that is OK. The main thing is averaging that 2 points per day over an extended period. It is very possible, people are doing that and more all over the country and you could to.

On the main page we talk a lot about discipline, patients, and focus, all essential things for reaching your goals. But first you need to know how to trade. I offer that in my course and if you decide to become part of the family, I will see to it that you understand my trading method and how to apply it.

When we put on a trade, we teach how to enter at just the right moment as the momentum will carry you higher or lower which ever way to you are trading.

Make Money as prices go up or down

Which brings me to my next point. You can make money in either direction, up or down. Often, prices go down a lot faster that they do going up. The principal works the same. When you put on a trade that is going up, we would call that a LONG TRADE and when you put on a trade that is going down, we call that a SHORT TRADE. We teach how to take these trades in a clear concise way. No gray area.

When we take a Long Trade, we Buy to Open / Sell to Close

When we take a Short Trade, we Sell to Open / Buy to Close

There is always someone on the other side of the trade to take the position, the price is the only thing that changes. If you sold the futures or “Shorted” the market at the S&P price of 1091 and you covered the trade by buying it back at a lower price at 1088, you just made a 3 point profit of $50 X 3 points = $ 150 dollars per contract traded.

Remember that each tick is broken up in quarters and 4 quarters make up 1 point. You can think of it like 4 quarters make a dollar, but in this case, it makes $50, because each tick is worth $12.50.

Commission cost for the transaction varies on the broker but the typical costs is about $2.00 to buy one contract and $2 to sell one contract. The complete transaction is called “round-turn”, buying, then selling.

TIME CHARTS

When building our charts on the screen, we use tick data. Tick data is different than time data. Trading in a one minute bar chart is the smallest increment of time that you can use. When using TICK CHARTS, you can create a much more detailed view of the trading history. It is through this trading history that we are able to draw up our entries in this much more detailed view. It allows us to enter at the exact point, Sniper Style, to hit our mark. Get in, Get out, Get done.

We teach precise entry and exit points using these tick charts and with the ongoing training you will always see the method applied to current data.

Above, is an example of a Candle Stick Chart. These are typical setups for us, as you can see the entries short and then long. The first trade was good for 1 to 2 points and the second good for the same or higher.

I usually follow bar charts that have an open, high, low and close to them, as shown above. Some people like using candle stick charts and that is a matter of preference. Candle charts have a wider body and make it a little easier to see the open, high, low and close, but using tick charts, often we need the screen room to see the complete patterns developing as well as one feature that I use to help visually see the change in direction. Often, this change in direction matches the other components of the method which helps to confirm our entry, LONG or SHORT.

Different Types of Orders

There are three main types of orders used in our style of trading. There are “Market Orders”, “Limit Orders” and “Stop Orders”. I use all three of them at different times for different reasons and explain it all in my course and mentoring program.

A market order, in our style of trading is typically used to close positions that are still open. Others may use them to start a position but we don’t often do that. It better serves us to use this order when we have an open position close to our stop loss and decide it is better to close the position and the protective stop at once. Both done with one click of the mouse at the same time.

A “Limit Order”, is an order to buy or sell at the specific price that we specify. See the example below. There is a blue column, the “Bid Size” and red column, the “Ask Size” This is where I place my orders. By clicking inside the blue column, price 1091.50, I am willing to buy at that price only. When contracts become available from the other side, the red column, my order is filled and I will have gone “Long the S&P emini futures market”. The opposite is true for “Selling Short”. This is an example of buying or selling with a “Limit Order”.

The last order type, “Stop Orders”, are usually used to protect a trader from incurring a greater loss than what he has predetermined ahead of time. For me, it is 1 point or less on all trades I put on. ($50 dollars per contract traded or less). That is the maximum loss and is set automatically at the time I click the order to buy. No need to do anything else. You can set predefined limit order targets and they can go up at the same time as your order entry as well. One click of the mouse and the rest of the entire process is complete. You can even stagger your “Limit Order Targets” if you trade more than one contract, say 1 point and 2 points. If the first one gets hit and filled, your stop loss will automatically adjust itself to only protect now the remaining half of your open position. Nothing else needs to be done, but just the one click order entry, period.

This is a very nice feature for those who may lack discipline in placing their stops and targets when and where they should after they enter the market. You can even use the one click feature just explained and use a “Trailing Stop Loss”. This will automatically move your protective Stop Loss up with say a rising market. You can set a trigger point, say its one point. When you reach that one point level you sell half your first position, every tick the market rises from there, your stop will rise by that much, keeping a 4 tick stop position. If the market had moved up 3 points quickly and came back 1 point, you would automatically sell your remaining position at 2 points, locking in your profit. This is because you preprogrammed it to do just that. This again is a great way to capture more profit in a fast moving market all automatically. The only thing that starts the process is just the one click of the mouse. Done. Very Cool. I, most often do it manually, but that is me. I can show you how to set this upin a blink of an eye and teach you to effectively use this feature.

Different Types Of Trading

There are different types of trading. The three most common, “Day Trading”, “Swing Trading” and “Position Trading”. Day Trading is what we do, because we never hold any position over night and make a few trades inside the daily session. Swing Trading, will carry positions over-night and hold those positions for several days. Position Trading, will hold similar trades but for several weeks or months.

Inside of Day Trading, there are several approaches as well. We look at three main tick charts, separated by small, medium and large time frames. Depending on the traders preference, if he or she has one, we can tailor our program to match your current trading style, or mirror what I am using for my trading. In our first meeting together, I will be able to help you discover what is the best time frame for you to start with. Naturally, I will show you how I set up my charts and fully explain the way that I trade. After that, we can go from there.

Scalp Trading

Scalp Trading, is often misunderstood. There is really no set definition that will clearly define it. It may mean one thing to someone and something else to another. That said, what I most often do is Scalp Trade the S&P 500 futures emini market. You can trade other markets like the Russell, the NASDAQ, or the Dow Jones. Each has an emini futures market that is liquid and very trade-able.

When the trading range is very narrow, scalping 2, 3 or 4 ticks, may be all the market safely gives you, without waiting around hours for a good trade setup. This is how I would define Scalp Trading.

With our base daily goal of 2 points or 8 ticks, you only really need say, 1 trade for 1 point and two trades for 3 ticks and that would also cover commissions and you are done for the day.

The setups are the same in the smallest time frame, as compared to the highest time frame, because the market is “Fractal” in nature. That means the same patterns and setups occur in all time frames across the board, showing a trading symmetry that is often seen in nature, below is an example of that.

With my trading approach, we are able to capture what the market is giving us. If the trading range is expanding and large swings are showing up, we can capture those moves for multiple point returns.

Scalp Trading, gives you the ability to save time in your trading, by getting in getting out and getting done with it and on to other things. I don’t trade all day, like many do. This style of trading offers the “Time Freedom” that many covet. Having the Trading Discipline to walk away after hitting our Day Trading Goal is key in keeping the struggle to a minimum.

Getting what you need from the market, is like shopping for fresh meat and produce at your local supermarket. If you try to stock up on too much, it will go bad and you will lose it all. I find the same true in trading, getting what you need for today is a better approach and produces trading discipline, controls greed and keeps the traders struggle manageable. It is a lot easier to get 2-4 point in a day verses 8-10 points in a day. When you are not able to reach this high trading goal, it will produce frustration and feelings of failure can creep in, derailing all of your efforts.

Controlling Fear and Greed

Many traders just starting out, soon discover that they have almost what seems like uncontrollable trading emotions. They find it difficult to stay focused and maintain control. Often, traders find themselves trading with their minds to focused on the money. That is a sure-fire way to slow your progress and often ruin it entirely.

Most traders have gone through this, but most don’t know how to break the bonds of these powerful emotions, Fear and Greed while Day Trading. The good news is, I do know and is very much apart of the Sniper Trading approach. These are things that I uncover and address to my students and take this part very seriously. Starting out, many are not even aware of these dangers, but that is my job to prepare you for any unforeseen problems that can come between you and your modest daily trading goal each day.

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The Key To Living Your Day Trading Dreams !

Wednesday, February 3rd, 2010

Today is Tuesday February 2nd and the market showed some nice upside follow through from yesterdays rally.

The market did react like I thought it would today, which is always nice to see. I hold any opinions about direction very lightly. The market can always do something different, so I can not make my trading plans around what I think will happen in the future. If I do, I run the risk of trying to force my will on the market and that is never a good idea. For fun, I will put up yesterdays comment.

Yesterdays Blog comments: I do see some pretty strong over-head resistance just a couple of points higher from todays close. We very well may see a slight rise on the open, followed by a pull back down inside the range one more time, before we make another attempt to break out of the downtrend. We will see what tomorrow brings, it should be good. I think the price action is going to get better, with good swings in both directions.

The cash market closed yesterday at 1089.30 and we pushed ahead a couple of points to 1092 and then fell back inside the resent range back down to 1088. The resent range was 1084 low, to 1092 high and back into the middle range at 1088. Then the breakout occurred and with conviction closing at the highs of the day +14 points on the S&P and +111 on the Dow Jones. We could see 10-15 points plus more before this reaction rally runs out of gas. We may struggle here a bit first, there is some overhead resistance near by, but over the next few days it would seem that the short-term momentum is up. Cash S&P 1007  to 1017 should be the destination point. The daily momentum is pointing down pretty decisively, but it is normal price action for the market to recover some here first, before its next move unfolds.

Today I took only three trades and it was in the afternoon session. They were for -1 tick first trade / +5 ticks, +8 ticks/ and +10 ticks second trade / and the last trade was for +3 tick and +5 ticks. I traded for 35 minutes and wrapped it up. I have a video of the trades below.

Yesterday, I started to share something with you and did not have enough time to finish, so I will get right into it here.

I was saying, that I know there are many traders who know how to trade well, but it seems that there are some unseen things that just keep holding them back from getting to the profit column. This will apply to traders who are just starting out and want to live the dream as well. Both people in these groups need something that goes beyond trading the charts. They need a solid mental foundation to build upon.

If you try to build a skyscraper and do not do a ground survey, you don’t know how the weight of the building is going to impact your foundation. If the proper work is not done, the building could be in jeopardy some time down the road. Well, that is exactly where many traders find themselves. Their building is going up and something is wrong, but they don’t know what it is. It is starting to lean-to the left and you realize there is a problem. The foundation may be shored up after a survey is now finally done, but there are times that the best decision is to bring the building down and start over.

So, if you are not to far along in your trading career and can learn this point, you will save money and potentially be on the road to financial freedom. If you have many years into it and have not discovered some of the essential things that will complement your trading career, now is the time, before the decision to bring the building down has to be made.

I do some mental exercises and physical exercises to help keep my mind and body fit. I have put up on my website a couple of these audio scripts that I listen too. It is in my voice, but I don’t think about that, I just try and let the message sink deep into my mind and see it as so. I am allowing myself to think the right thoughts to help me line up where I want to go and what I want to accomplish. I have 10 more of these audio’s in my trading program, but chose to put up two of them for visitors of Sniper Day Trading.

This is not really my complete point, this is only part of it. Rather than re-invent the wheel, I have found a guy named Ralph Marston who does some things like this. A little different, but it is great stuff. As I said yesterday, I have heard of a few traders you listen to some of the material from Ralph and they said that it has turned their trading career around. I to, enjoy his writings and his attitude. That is what you are going to need long-term, the right mind-set to establish the mental foundation that will take you straight to the top, no looking back. If you skip this point, I believe, you will wish you had not.

I do not get any compensation for recommending him or his site, but I want the readers of my blog to have all the advantages they need to succeed at day trading for a living.

Ralph has a free audio on his site called “The Best Year Ever” it is in the top left hand corner. It is a twenty-minute audio that I feel every aspiring day trader should listen too.

He puts out a daily motivational quote and it is always different, some are longer than others, but they are all great. He has done this for over 10 years. The daily motivational writings are free but he offers an audio message each week that runs 20-30 minutes long and can be downloaded to an MP3 player so you can listen a few times throughout the week. He only charges $10 dollars a month and is totally worth it, in my opinion. That is .33 cents per day and the best money I ever spent. 

As I said, I want the readers of my blog to get relevent information that can really help them achieve their goals. So here is the link for his site.  http://greatday.com/motivate/100202.html  His site is called “The Daily Motivator”.

I hope my readers see the importance of going the extra mile and building a great foundation. This is the kind of thing that can increase the odds of bringing it all together and living your dream.

 

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Learn Day Trading Skills – offer – Through Sniper Day Trading!

Saturday, January 23rd, 2010

Today is Friday January 22nd, and the sell-off continues.

Well, the only thing I can say is, I am not surprised with today’s price action. The market is doing everything it would normally do after a break in formation, as I layed out in yesterday’s blog post.

There may be a bounce somewhere in here, but time will tell. I know there are people out there that love to buy the dips. Engrained by the media and such, you have the sheep step up to the plate, ”FOR SHEARING”.

I did not see the news, but I can only imagine. I see the market through purely a technical lens and reading moves as they unfold. It is easier than trying to predict far in advance. With the break two days ago, it was not hard to imagine or expect the kind of downward price action we have seen. Institutions, investors and traders have their stops at those key support points for a reason, to protect themselves against a sell-off. Once the first domino was tossed, the next one gets hit and there you go. I am sure we have all seen the domino effect, that is what just happened the last couple of days.

At some point, there will be the brave, to step up and buy, thinking they are getting a good deal and maybe they are, but it is risky. The S&P is now in an area of support. It is the same area that I was looking at, but on the Dow Jones. That index traded below where I thought support would come in today, but the S&P over-road the support by breaking to the similar area where it now may try to find support. If I had called the support for the S&P yesterday, I would have used the area close to where we are now.

The S&P price of 1085 was hit 5 times over the past couple of months which may be a temporary spot for the market to pause. Currently we are at 1091.  If we trade past that, you will probably see a whole new wave of selling come in and we could find ourselves down to the S&P 1028 level. The middle of the range as I point out yesterday is Dow 8100 to 8600 and S&P 910 to 855.

Pretty scary stuff, but this is what I was warning about for some time. When the formation breaks, you will see the sell-off, sharp and deep.

When we bounce, where ever that is, what happens after that, is going to tell us how quick all of this may take. A slow gradual process will probably be better for most people.

On, to other topic’s;  In todays trading I was only at it, for 10 minutes and picked up my daily goal. I did mark up some trades on the screen after that for a little while and picked up some nice turning points. I may trade for a little higher point return next week, but with this Monday being a holiday and Tuesdays session flat. I wanted to make sure I picked up my net goal for the week safely and I did that. So, next week, I may trade a little more. Also, I needed a little cooling off period for the bad trades I took on Tuesday. It all worked out well and look forward to next week.

Below, I marked up my screen with the turning points as I did yesterday but I took the indicator off. I just have the signals as they were generated. I screened out only a few of the very obvious no trades, but marked up most of the trades generated just by that one indicator as I did yesterday. I look at a lot more than indicators, I look at price action through its structure, to see if the components are there for the trade. The indicators, only confirm what I see already through the price. That is how it works for me. I know others use it the other way around. Using the indicators to confirm price. I don’t teach that or do that. If you learn how good price structure looks like, you will be looking for something very specific. When the indicators confirm your timing, it can give the learning trader a little more confidence to take the trade. But over time, seeing the same patterns again and again, we learn to look for what makes up a good trade just by its structure.

Anyone who wants to learn more, can. I do teach this as the “Sniper Day Trading Method” designed by me.

It is a collection of techniques and repeatable price pattern structures that happen with a great deal of consistency. Using the full spectrum of indicators I have on top of the price as well as under the price, will only make the job easier to see what is already present on the basic clean chart itself. This stuff speaks out its own language as the swings taking place, each and every day. 

There is something here for everyone. If you like to scalp trade as I do, trading with the trend and counter trend, I have that. If you prefer to only trade in the direction of the dominant trend we can set that up, if you like to trade higher time frame charts and go for a higher profit loss ratios, we can customize that for you. The principles are all the same. This will work great on Stocks as well as Forex currency pairs. The higher the time frame, the higher the risk, but the higher reward. You also get fewer trades as you go up in the time frame spectrum.

I use a small 1 point stop on most all my trades or less, but that is me. I know some in my group use 5 ticks. That is fine, but I urge all to move there stops up with price as things go your way. I like to scale out and put myself in a no loose situation and I teach that too.

I don’t only offer the trading course, I work with each trader, to not only answer there questions, but to explain it and call it out during the live market, so you can see the same thing on the screen live. I will work with any trader as long as it takes to fully understand how he or she can use the Sniper Day Trading method through screen sharing technology over Skype.

If you have questions, feel free to contact me through Skype, my screen name is SniperDayTrading. Have a great weekend.

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S&P 500 Index & Dow Jones Break Rising Wedge Formation

Friday, January 22nd, 2010

Today is Thursday January 21st and it finally happened, breaking the “Rising Wedge” on the Dow and S&P Index.

This has been in the works, building up pressure for some time and today something sent the major averages south for the winter. I popped on an internet news source and I think Obama plans to tighten regulations on banks and their investment practices. Banks don’t like being told what they can and can’t do, when it comes to investments, but that may be the case? I just saw the headlines.

The point is, what ever tipped the market, it happened. I would like to be optimistic, but when I see a pattern like this and a break like today with the market closing at the lows of the day, investors should be concerned. With day traders like myself, it does not really matter, we welcome the increased volatility, it is long overdue.

We are coming off the highs just two days ago and getting pinched between two trading ranges, that were getting smaller and smaller as time went by. That is why the movement has been so shallow. I think that has now changed and if nothing else, you will see a lot more swings and tradable moves going forward.

I can see the market trading lower to the next pivot low of around 10250 and possibly trying to rally. That would be normal, as there seems to be support at those levels. A short rally off that price will give you the next clue. What ever happens from there, will begin the next chapter.

It is very possible that we go back to the middle of the range we just finished making. That is what I would expect if I was looking at a tick chart inside of one day. The stock market is “Fractal” in nature. The patterns it presents and plays out are the same no matter what time frame you are looking at. This to me is just amazing. When I discovered that many years ago, it kind of blew me away.

So, back to the point, we could see a move over the next few months in the Dow to 8600 to 8100 if we get a retracement back to the middle of  the nine month long rally. That represents a 50% and 62% retracement from the March 6th low to the January 19th high, set just two days ago. No one knows the future, that I understand and accept, but I am just stating the possibilities. We will need to see how the market handles the next pivot low.

Investors will be buying the dips, that is for sure. People and the so-called experts will come on TV and tell America that what you wanted to buy a couple of days ago, just went on sale and everyone likes a good sale, right. Well, I can’t tell anyone what to do, but  I am not buying now for any long-term investments myself.

This is another area, where traders and investors get in trouble. I know there is no guarantee and the market can do what ever it wants when ever it wants to, but the odds favor a decline. If nothing else, this is a good time to lock in profits, but Greed many times will sneak in and tell us, it will go back up, it has too. Says who. Wishful thinking will not move the markets and Greed will more often hurt you bad and leave you for dead.

I was going to put off talking about Fear & Greed for a day or so, after the dust settles on this recent move.

In my trading I did well early on and stopped with about 10 minutes of trading. I did see and mark my chart for the next few trades, including the start of the big drop.

I have a video of the todays trades as well as the signals generated for most of the day following. When watching, keep in mind that you only need a couple of small trades to make really good money, but doing it daily is where the real reward comes in.

 

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Will Dow Jones Industrial support hold?

Monday, November 2nd, 2009

This post is for Fridays session, October 30th.

The market sold off like fiercely on Friday and took the Dow down about 250 points. The S&P was off about 30 points. I did think that a re-test of the Wednesday and Thursdays low would come, but not so fast. I thought we had at least one more day to top out for the counter trend rally. There was news that came out on Friday, not really sure what it was to tell you the truth, but I could only imagine that it wasn’t good and the market reacted to it. It is to be expected.

Let me tell you, that in the month of September and October, the general public has become bullish. The last two months has only produced paltry gains when compared to the gains of the previous six months. That is where all of the money has been made. The general public is always late to the party and I don’t imagine that this time is going to be any different.

Mondays session is going to tell all, at least for now. What I mean is as I was telling you last week that the Dow has been outperforming the S&P and that was a problem. Well, it is not only the S&P that it is outperforming but the other index’s, but in a bigger way.

Based on my experience and I did not see this or hear this from anywhere, but years of seeing price action at work, the institutions are lightening up their riskier positions and reallocating equity assets in the high quality Dow Stocks. I mentioned this a couple of weeks ago, if I remember correctly. That is pretty typical at market tops

The Nasdaq Index is at a double bottom from its most recent pivot point low, something that the S&P is thinking about doing, to follow suit. The Russel 2000 Index has already overwhelmingly broke its most recent pivot low, by a wide margin. The Dow on the other hand has not broken down yet at all, but is sitting right on a major trend line support.

So, the Dow is the strongest, next comes the S&P 500, then the Nasdaq and lastly the Russel 2000. If the Dow holds and moves higher, the other indexes will only be making a counter trend rally, but will still remain in a down-trend, stopping at overhead resistance. Once the Dow does break down, all of the other Indexes will only go down that much farther and faster. There is a lot of room for the market to move back to the middle of its range of the last 8 months.

The last thing I will say about all of this tonight is, “Earnings”. I don’t follow this much either, but just the big picture. The projected earning that Standard & Poors are putting out for the S&P 500 for next year are a bit of a fairy tale. They have been constantly wrong and now they are painting a wonderful rebound of large proportion in earnings. Anything is possible, but I doubt it. I had heard, according to Bloomburg, that the S&P has had declining earnings for 9 straight quarters and only this last quarter have they been able to increase earnings. Those increases are from very depressed levels, not that hard. The increase in earnings in my estimation is coming from cost cutting in various forms. You can only cut cost so much and for so long, before you can not cut anymore. Where are the increases in sales going to come from. No one is spending and no one is lending and money??? INTERESTING.

That is why, the market is going to adjust itself to reflect where it is going to be in 6-9 months from now, probable lower. Just now the S&P is turning their earnings, like this month. If you invest in these companies now, you are going to pay way to much. But that is what the public does. You needed to be invested at least 6 months ago to be able to enjoy some of this rally, not two months ago, like I talked about at the top of todays post.

We need to see what the Dow is going to do in Mondays session. If it to breaks support, then all of the indexes will have downside momentum working for it. But if it can hold, there is now room for it to clear 10,300, a complete 50 retracement from it’s all time high. The S&P numbers for the same retracement are 1120. We got close.

The sentiment numbers backed off just a little last week. It is sitting at 48% Bulls. A reading of 55% is considered bearish. We only got as high as 51. One last push to the numbers above could push the reading to 55%, the big word in there is COULD.

Friday’s session was incredible. So many great clear signals all day long. I only took one trade and it was split up, what I call a “T-2″.   The first half for +1 point and the second part for 3 1/2 points. I was in the market for less than 1 minute on the first part and 4 more minutes for the second part. I really only had my screen open for 15 minutes, start to finish. There will be plenty of other trading days to capture higher point returns. But my daily goal was meet, no struggle, no fuss, no mess. Just the way I like it.

Until tomorrow

 

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