Posts Tagged ‘S&P 500’

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The S & P is Getting Ready for a good move, which way?

Thursday, February 11th, 2010

Today is Wednesday February 10th and the market ended the day down slightly, -2 on the S&P and -20 on the Dow.

I have been sick the last couple of days and was not able to get a post in yesterday. I did trade for a few minutes yesterday and picked up some nice quick easy trades. Today I traded as well, but I don’t know exactly what I was thinking. This needs to be one of those lessons I need to learn from. Don’t trade if you are sick, pretty simple. ( I didn’t get the memo, lol.)

I started off with a two point gain and another for a point and half or so and that should have done it. But I traded way more than I should have, given that fact that I was not all there. Crazy. The day worked out still fine. I did pick up my daily goal, but what I don’t like is making poor trading decisions under terrible conditions, being sick. I usually only use a very small stop and if my concentration is not there I could see a daily stop out for me, of -4 points. I have not had one in a long time and I want to keep it that way.

This is one of the reasons I write this blog. To get on myself when I mess up. Some may thing I am being hard on myself and I am. If I am not hard on myself, then who is going to. I still made an equivelent of about 3 1/2 points after commissions, but that is not the point. If I start taking non method trades, eventually it will catch up and cause me to be stopped out for the day.

The beauty of having disciple enough to stick to a daily stop-loss point is because if you do something crazy, or what ever, the worst thing that is going to happen is that you have a manageable small loss on the day. When I ask myself, what is the worst thing that can happen to me today. I always know what the answer to that question is, that in itself, takes the pressure off or makes it easier.

Anyway, the price action was great yesterday. I did see some really good moves, just before the big reversal, wow, nice rally’s and price movement up until the afternoon and the same for today. Both days afternoon sessions have been choppy and not exactly what we expect. The early sessions have been pretty good, but you do get some choppy swings at times. It does not seem to last more than 15 or 20 minutes though.

From Mondays post, I remember saying that if we were able to get above 1063 on the cash S&P we would soon see 1071. If we are able to get above 1071, we soon see 1077-1080. Over 80 we will see 1097-1109.

Well, we got the first three exactly. The high was 1079.28 on the cash. That is exactly where we sold off and was the high for the day. The market closed off about 10 points from that high. We did not yet see the last part of that and it could come tomorrow or the start of it. In fact, we are in middle ground now and it actually go either way.

Today was an inside day. Todays trading range is inside of yesterdays and when that happens, you are getting the build up necessary for a big move. We have been basing for three days now since the sell off and as I said, it could still go either way. I would say that the odds are it goes up to hit the upper targets I mentioned. On the dow, it looks like about 300 points plus. The either way, is an equal distance down as well.

If we go up to hit that upper target, I don’t think it will hold. That being said, I would like to see the sentiment numbers that came out yesterday and will be published tomorrow. (Market Harmonic’s) has it there for free, with a two-day delay.

That is about all I can write, when I am feeling better, I will post some good information and continue with helpful things that may help us all in the battle to over-come.

Good Trading !

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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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Shocking Link in todays post, be warned

Wednesday, October 28th, 2009

Today is Tuesday October 27th and things slowed down a little today after yesterdays wild ride.

The S&P cash came into the support area I mentioned in my posting yesterday, a short comment but this is what I wrote.

 From yesterdays blog: “Currently the cash S&P support is about 7 points lower from its current level.”

Like I said, it was a short comment identifying the next major area of support as I saw it. Yesterdays cash S&P 500 close was 1066.94 and the support that I saw did in fact come in exactly at that area today, with the index dropping to 1060.82 after 35 minutes of trading. It then moved up off that area by 12 S&P points only to drop all the way back down to the exact same support area I mentioned yesterday, for yet again a second time. At 10:35 the index was back at support, 1060.62, this time, for 10 minutes until it moved out 8 points up off the same support area.

It is important to note something about todays market. We had the Dow with a gain today of about 14 points and the S&P with a loss of around 3 1/2 points. This is not a huge disparity, but it is worth noting. The Dow has not pulled back far enough to establish its natural rhythm for this pull back, while the S&P has. If the Dow had pulled back along with the S&P, I would feel better about this support level holding, but to often you see the Dow come back at a latter time and finish its move, only to then force a break of support for the S&P.

So, what I am trying to say is, I am a little suspect of this support holding, on the S&P. I would like to see it hold and have the index make its final push up to the 1120 area like I have been calling for the last 6 months. I believe once that level is hit, the players will not have a reason to hold on any longer and really start selling, but that is my take on it. It does not have to be yours.

Let me give you a web site to take a look at. You may want to share it with your friends. I find it very interesting in that a picture is worth a thousand words. Their is not a lot of words but a lot of numbers, BIG ONES. The average person, I believe will be shocked and even the not so average. I still get chills to my spin when I look at this.

Before I say where this site is, I have been following these numbers for literally decades, no kidding. Just like I thought back then, I think the same now. It won’t last forever without a massive shift taking place.

This is a big reason for the continued problems which lie ahead. You can not spend more than you make and expect things not be effected. All of these numbers are backed up and if you put your mouse over the box, it will give you the source. Take a look at the bail out numbers, WOW.

Last warning to all with a weak stomach, don’t go to this site….  The bottom line is what everyone always talks about. If you see the bottom line and especially the bottom right hand corner, cover your eyes. “Alright already, give me the site, your killing me.” I know, sorry but, disclosure and all for the faint hearted.

http://usdebtclock.org/       There it is !

I should have my website update pretty soon, look for new content and new lower prices for my course. The time to make your money is now.  If you have trading resources, get yourself ready. There is no better time to go forward with fulfilling your trading dreams. The content in my program I believe will help you get there. Look for the updates in a week or so. Those interested now and want more information, E-Mail me at vinnie@sniperdaytrading.com 

Vince  

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Will we have an “October Surprise”, time is running out !

Tuesday, October 20th, 2009

Today is Monday October 19th and the bulls took over with a very nice rally today.

In my last post, I said the S&P needed to stay above where it was and only had a few points of room before a little pull back was going to be initiated. The future’s market pulled down to that level  in the after market and it suddenly blasted off. I guess the traders saw that same support area I was looking at and decided it was a good area to buy off of and they did. They Dow closed up 96 points and the S&P up over 10 points.

It looks like the top of the channel has a little more room in it before it meets up to the overhead resistance present by the rising long term wedge formation. The last few days gave it a little more room to move up. We are getting closer to that 50% mark for both the Dow and S&P. Once we get to those numbers, something is going to happen, that is for sure. I know that there are a lot of traders watching those numbers and I would bet they will be looking for an excuse to lighten up. Even if the uptrend stays intact, the volatility is going to pick up.

The month of October has traditionally been the worst trading month of the year by all historical standards. So far, we are getting through it OK. There are 9 trading days left in the month, lets hope we can get into November without any major damage. As a trader, it does not really matter, but for the investment community, I am sure they feel the way I do.

Below, I have a chart for you to look at. This is a monthly chart of the S&P.  I believe the March bottom was an immediate reaction to a natural retracement level of 62%, a Fibonacci number. From the lows of 1982/83 to the highs of October 2007, a 25 year bull run, the market pulled down to a natural support zone and bounced straight up and has not looked back. This bounce has created in my opinion a sort of V bottom. By rushing the bottoming process, to me sets the stage for a pull back to the middle of its range, somewhere near 900 area. It is still to soon to make that call since the market is still climbing, but once this rally objective has been reached, traders will be looking for a whole new set of objectives.

Earnings season has started and usually last about 4 weeks. We are only into it the first week. I really don’t pay much attention to these numbers as they are all built into the price. Reading price action tells all. So far so good. I wonder if there are going to be any surprises though, let us just hope it is not the scary kind, if at all.

http://www.screencast.com/t/IIjKrI2VKRos             Monthly S&P 500 cash chart

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Today’s Market Coments; Training idea’s continue tomorrow

Friday, June 26th, 2009

Today is Thursday June 25th and the markets have made a move.

Did not follow the markets today but had a chance to look at the price action after-the-fact. I saw that in the pre-market, futures on the S&P moved up sharply just a few points above yesterday’s high, very typical. That move took out the stops just above that previous high and with no additional buyers, it was straight back down to this morning’s open.

After the open a slight drift lower and a big break out over some real nice pivot points that sent the market straight up from there. There were two more pushes higher, the second good for another massive leg of 12 points.

Well, you don’t get days like that too often, especially in the summer months. I have noticed the volume is way down, not quite by half. That makes it a little harder to trade at times. The volume is coming in early on the session, with traders leaving for the rest of day. They are making their money and going on to do something else.

But today looked a bit different. We have not had any real good swings like I see on the charts today. But remember, no two days are alike. Many traders will attempt to play tomorrow’s action similar to today’s, but will find out that it may or may not work out that way. Often after a big move up or down, you will see a good bit of consolidation, marked by short swings up and down. This is the market’s way of digesting the meal that it just ate.

So be prepared for that just the same as you would be prepared for follow through moves of similar magnitude. Looking at today’s price action, there seems to be a bit more room to the upside of this move to around 930 on the cash market. Have a look at it below in a 10 minute bar chart. You will see a nice little break out just after the open, that pushed it to the top of the range, just before it broke out above the range. In a small time frame chart, this looked about as good as it gets. At 6:39 you have a solid buy at 893.50 which if you rode it up, the move would have kept you in the trade until 7:14 am exiting at 903 for 9 1/2 point gain. Very nice price action day for those trading the trend.

I am going to end my post for now. I have my daughter visiting from out of town but will continue the training where I left off in tomorrow’s posting.

http://www.screencast.com/t/grAuYtKS4jl 10 minute chart of S&P 500 cash

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Markets Retreat

Tuesday, June 23rd, 2009

Today is Monday June 22nd and the markets really sold off today.

Glad to be back, I had a host of computer problems and Internet problems all at once. Lost a lot of data and programs, tried to get satellite feed hooked up to a new computer with no upload bandwidth capabilities. Too much to talk about here. I live out in the country and high speed Internet is not available so I am at the mercy of other options.

The market put in a a big down day after an early sell off in the pre-market to get it started. All the indexes closed at their lows for the day, which is not really a good sign for tomorrow’s open.  Should be some additional selling on the open as a follow through reaction from today.  All the smaller traders and investors are going to see the news tonight and get spooked and place early morning sell orders or at least that is what it looks like to me.

I have included a daily chart of the S&P below. Notice the parallel channel. There could be some support there at the neckline, expect a bounce. We will need to see what happens after the bounce to get a better read on future direction. It is still possible we pull down a bit, but not too much and rally off this pullback to push past the old highs through the summer months. But there is strong resistance at that old high and it is going to take some big news or excuse to buy through that resistance. Don’t know until we finish this pull back and look at the bounce up.

Have not done much trading since last week, so there’s nothing to report there. I may not be able to broadcast my screen to those who follow me right now, but I will still be able to use the conference line. Internet data provider says that they will put a restricter on my account because I am using too much bandwidth. That’s why I tried the satellite. Download there is fine, but I have no upload capabilities at all trying to stream data, maintain conference line through Skype and broadcast my screen. I am still looking at all possibilities but I am limited.

I will be on tomorrow and we will see how it goes. If I trade, it will only be very small size.

Until then, I wish everyone well.

http://www.screencast.com/t/QLxiIWwx1xj daily chart of S&P 500

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May be my most important post: History

Friday, February 27th, 2009

Today is Thursday, February 26th and today might be my most important informative post to date.

That’s right, today we are going to have a history lesson and not just any history lesson. This one may be a little tough to handle, but everyone should know the possibilities of where we are in the big picture and what could happen.

If you remember the movie, “The Matrix”, there is a scene in there where K. Reeves is asked if he wanted to take the blue pill or the red pill. The blue pill represented not wanting to know what was going on in the world around him, while the red pill represented what was actually happening. If someone asked you, which one would you pick? What we are discussing here is whether history is repeating itself, or is this recent downturn just another cycle in the making?

Below, are two charts, one showing the stock market’s escalation during the roaring 20’s and then the peak in October 1929, followed by the crash and the years thereafter. The other chart shows where we are in the current environment and how it may, or may not relate. Believe me, I do not wish that they relate in any fashion whatsoever, but I have been following and predicting this scenario for a good 20 years.

I would say it was in 1986, just before the big build up of the 1987 crash that took place on wall street, that I became very interested in trends and how history has a way of repeating itself. You all know the saying, that those who don’t learn from history are doomed to repeat it. I did not want to be one of those people who were doomed, so I began to arm myself with knowledge and information.

So I knew that this drop we are experiencing has been coming for a long time. In fact you will see the arrows that I have marked on the current chart which are the actual calls that I made during that exact time in history. Anyone who knows me can verify that this is true.

Anyway, I just need to show my readers what is going on and how it may or may not compare to the past. I will not tell everyone what to think, that would be irresponsible of me to do so, but I will just lay it out and you can make up your own mind.

I don’t want to talk about politics, but there are things that are changing that have not happened before in this country. The Feds are exercising and far over-reaching their intended roles as were originally set up. I think a lot of people will agree with that. I so often hear of how the markets seem to be manipulated and that might be true or it might not, but the answer to that is not as important as what can we do about it? My answer is: learn how to read price action and make a lot of money while we have the opportunity to do so. All news or intervention or what have you is reflected in current price action. If you know how to read it, then you will not be a victim and powerless. Taking control of your future is all of our responsibility individually and not the role government.

In the 1930’s the government was trying to prop up failing institutions and threw a lot of money at the depression but it did not help. Many experts say that all it did is prolong the depression for a whole lot longer than it needed to be and that it was W.W.II that lifted us out of the slump. That sounds about right. What I am seeing and hearing are similar potential scenarios.

We are currently into this decline by about a little over 1 year. Most declines of this magnitude take about 3 years minimum to work off the excess and be positioned for a move back up. I would expect this move down to be no different and in fact could last a lot longer. It will all depend on how fast we fall. So far, we have fallen pretty darn fast.

It has been a 50% + drop off the highs and we have not yet stabilized. The market is a funny thing in that it almost has a mind of its own. In a way, that is very true in that it is a collection of millions of people’s minds all being reflected in one place. They are sending a message out to the world that something is wrong and there needs to be an adjustmentto more properly line itself up with future earnings, which are expected to fall a lot.

You will get a wide array of opinion what this year’s future earnings on the S&P 500 will be. I have heard the main characters on the street predicting somewhere near 60.00 dollars. This is a collection of earnings which when divided by the companies they represent, gives you a number, a price earnings multiple. This week I heard that someone at Merrill Lynch was saying that it was going to be closer to 29.00 dollars. If that is the case, then you are going to be looking at valuations closer to half of what the current market is now at. That’s not good.

When you get something going in a certain direction that is so big and has moved so fast, with no sign of stopping as yet, it is hard many times to bring it to a halt. A couple of examples may be a big fast moving car or, better yet, a huge set of dominos all lined up. One just keeps knocking over the other, until they all fall down. This is what it looks like to me.

When you open your mind and look objectively without bias, you can see that something is seriously wrong with our current financial condition. Our debt load is so high, in all groups – personal, city, state, federal, corporate. This debt needs to be serviced by someone. China and Russia and Japan, as well as Europe, have been buying our government bonds making up the shortfall from what we are spending and I just heard tonight that our new federal budget is over 1 trillion in the red – for just this year.

That is the best case scenario, but you know that there are going to be many other unforeseen things to come up along the course of this year. We will be paying interest on all of that debt and all the other accumulated debt that is piling up so fast you can hardly count that high. In a nut shell, our current system is going to break eventually, unless there is some new discovery, like turning water into free energy of gas, etc. That will cause a new boom to take hold and pull us out of the mess.

I don’t see it happening fast enough to avoid the problems we face next week, month and year. I hear a lot talk about a “new global order” is what we need. Well, I could really run with that but will try and stay on topic. It is a related subject, because during the past 10 plus years, corporations went global, in order to continue to keep their earnings expanding, and they did a good job of sending our manufacturing industry around the world at a big savings, thus increasing their bottom line and in turn causing their stocks to rise. See my point? Now, things are changing and a contraction has taken hold, sending exports south, and thus earnings have turned down, translating into lower stock prices again.

What is going to stop the slide in earnings and consumption? I really do not know.  What some people may not know is there was a big push for currently trying to “buy american” made goods. In fact the president has said this as well. Canada got wind of this last week and had a little meeting with the White House and said their economy is 70% dependant on export and that a policy like that would kill their economy. Obama had to back track a little to cover himself.

Who knows what will really happen, but this is called protectionism and its what happened during the depression of the early 30’s. Again, we seem to be repeating the same things done during that era. Someone once said, “crazy is doing the same wrong thing as before and expecting different results”. I would have to agree.

Maybe I will talk more about it at another time. The interesting thing is, look at the two charts, then and now. We would all be best served to plan for the worst and hope for the best and make money if you can.

That’s where I come in. If anyone needs help in understanding the market and how to trade it, let me know. If you have questions, email me. Keep your chin up and let’s hold our leaders to their oaths of office, to ensure that this great country continues as it was intended.

http://www.screencast.com/t/4mHwcMhSx              1920’s rise and fall

http://www.screencast.com/t/o8nEON3Bs                 Today’s market

http://www.screencast.com/t/o8nEON3Bs                Live market trades

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S&P 500 bounces off double bottom & Trading Lesson

Monday, February 23rd, 2009

It is Sunday February 22nd with a weekend report and review.

The S&P 500 bounced off the previous low set on November 20th last year. It did close up off of that low which is good. I have been hoping the overall market can hold on for a while before it continues down, but what I want does not matter to the markets. It would be wise, to learn from that point of view. When you trade, don’t try and impose your will on the markets, by your strong directional bias. The market does not care about what we think, it is going to do everything it can to fake you out and get you to establish a position in the wrong direction.

The S&P 500 is currently at the bottom end of it’s range. Usually, when that happens you will get a bounce off that bottom. At this point there is really no way of knowing how big a bounce it will be. I suspect that it would be enough to make up a bit of the drop that we have recently experienced the last week. This rally, if we get one,  is what I would call a retail rally. What I mean by retail, is this is usually not the smart experienced money. A double bottom is a very basic chart formation and it looks to me like this may hold over the next couple of days.  It could turn into something more significant, I hope, for the country’s sake.  The Dow actually broke down over 100 points below it’s November low. Sometimes that can be a sign that a short term rally will come. It broke just enough for investors and traders to bit. Now we shall see, if the market turns.

One interesting thing that many people do not know is that the Dow has recently had some changes in the stocks that make up the 30 companies in the index. It seems that any stock under 10 dollars per share has been taken out and replaced by other companies that have higher share prices. This will change the index values and not really give us a true representation of the market. Its like playing cards and you know you are going to loose with the hand that you have and so you just get a new set of cards and see if those work better for you. Seems a little shady and misleading to me. There has been a lot of that going on these days. On another day, I will have more to say about what is really going on in the markets and economy. Believe me, there is a lot more than meets the eye on this one. I have been following the stock market, politics and world events for over 25 years and there is a story here, but for another day.

                                                               TRADING LESSON: Trading Without Bias

When you establish a position in your mind, that the market should do this or that and when price action is saying something different, you are about to get burned. Fortunately my stops are small and my losses are thus small as well. When you have 2 or 3 stops in a row, you just need to stop. It does not matter what is going on, you are out of rhythm with the markets. Until you let a little time go by and focus on what is actually happening, only then will you begin to see the light. A little time is the best medicine for this scenario. If you still do not get it right, you need to stop for the day.

I have a rule, that if I am down more than my daily goal, I need to take a break, no matter what. After that break, when I come back if I go down in equity by double daily goal, that day’s trading is over, period. I came up to this point once this week and my next trade had to be right or I was going to have my first losing day in months. Fortunately, I waited until I found a high percentage trade and built my equity back up from there, one trade after another.  That bears repeating, one trade at a time.

Many people will try and make up negative equity by getting it back all at once. I do not advise this. If the patterns present themselves, then take the trade, but you may even want to decrease your size for a short time until you know you are back on track. Once you have yourself in tune with the markets again, you can then resume your normal trade size. I would throw in taking small breaks during your come back, to insure you are not getting overloaded or burnt out. A fresh mind can do wonders for your P&L.

This one rule can save many traders from blowing their account out in such a short amount of time. If you don’t stop, it then becomes compulsive negative behavior and that will ingrain in you very bad habits, which you may never break until the market has broken you.

If traders followed this one idea and have the trading discipline to adhere to it, the percentage of successful traders would go up by a wide margin. But human nature as it is, we know through studies of trader psychology that most people will not change. They will insist that they know how to trade these markets and they had just gotten a bad break here or there. Well, if it was not this day’s bad breaks or next week’s mishap, it will be something else. The market has a way of cleaning out all of the weak hands. Whatever their problems are, it will find them and exploit them, until it breaks you. That is the hard cold facts.

Now on the other hand, when you are aware of this force and plan and train for the days that the market is trying to take you down, you need to fight back. How do you do that, you may ask? Well, it first starts out by having a trading plan. You would be surprised how many people do not have one. Second, you will need a trading journal. This helps you record for yourself, if you are following your trading plan with what you are doing right and what you are doing wrong. If you can identify what you are doing wrong, then you can take steps to change and/or improve. When you are doing things right, that also is very important, because it is establishing in you consistent trading behavior that you will need to fall back on when things become difficult. You need to have a plum line, something that is constant, your trading plane.  Everyone’s trading style is different, because we are all different in our personalities.

Trading involves emotions, that is what brings most people to make a buying decision or not. The struggle of bulls and bears during the trading day is all about personal convictions for most people. We need not get caught up in the struggle, but knowing that it is going on is vital in positioning ourselves in front of that emotion. When we do that, we will be able to ride small waves of movement or (emotion) and capture profit from that. The markets have proven themselves to be consistent because people are creatures of habit. They seem to do the same things over and over again. We just put ourselves in the position to capitalize on that predictability.

More coming tomorrow

Vince

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Day three of sample training & Posting steady profits

Thursday, February 12th, 2009

Today is day three of my small training video series started on Monday this week.

There are nine parts to this in total and I will continue to post them until finished. The idea is to give you some insight into how a person can take money out of the market each day. I have not had any problem posting positive results every day I am trading the S&P 500 E-Mini futures. It is possible for you to do this as well.

If anyone is interested in learning more and wants to be mentored through this process all you need to do is send me an email message and I will be ready to show you more closely how this process can work for you. I now have more time to devoted to this process and will be able to respond to your emails more timely. My plan is to continue posting my results as well as my screen shots of my trades to show you that it can be done. In addition, with time you will see that the trade timing is consistent and duplicatable. There is no substitute for understanding price action and how to maneuver through those waters, but with my semi-custom timing indicator, it is a nice tool to help ensure that you are on the right side of the trade as seen in my videos and postings.

Anyone interested in seeing me trade live, send me an email and I will patch you into my trading screen. It only takes a couple of minutes. If you want to hear me as well, I can connect you into my room through SKYPE. You can download that program through my website to listen and if you want to talk and ask questions in between trades you will need a headset. A microphone can be bought at Walmart or similar store for about $15. The relay of information from my computor to yours is in real time, no delay. I try and get the calls out with enough time for you to place your orders.  I am usually only trading for a few points with my partners to reach a daily goal of 2 to 3 points for them. Sometimes I come back and trade a little more myself  but it just depends.

In today’s market action, it was good to see the market hold but it is a little scary as it flirts with the current support off the bottom end of the range. The market sentiment numbers have come out as of yesterday and I will update them as I am able to get the information in tomorrow’s post.

My day trading today went quick lasting only 15 minutes before I picked up my daily goal. I have it posted below, but as I remember it was +3 ticks, +3 ticks, +3 ticks and +2 ticks, for a total of 2 & 3/4 points. Take a look as I have a screen shot of my trades below. I have not been trading that much lately, but that is ok. I will be increasing my contract size in the next day or two, so my profit will start going up while I still only need to trade for 2-3 points.

I wish everyone the best.  Vince

http://www.screencast.com/t/gKGSolGl                  Part 3 of sample training video

http://www.screencast.com/t/jPWhWDmn             Today’s equity chart

http://www.screencast.com/t/Y0qFdpVy               Screen Shot of Today’s trades

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