My name is Vince Tarantino and I am the originator of SniperDayTrading.com. Below is a little about myself and how I got started in the business.

I started following the markets in the early 1980’s. I was young and just getting started in raising a family, so my capital to trade or even invest was very limited or non-existent. This did not stop my interest in trading. I started to read a lot and observe what was happening in the financial markets. I remember in the early 80’s the Dow trading up to a new milestone of 1500. Many thought it would never last, but it just kept going higher from there.

The 1987 stock market crash did not surprise me. I saw the over exuberance and euphoria that I had learned about, but not personally experienced, until that time. Even back then I always looked at market psychology and how it relates to trading.

We were in October and the market was waving a big RED FLAG to me, saying sell, sell, sell. Within one week, the market sold off in a large way. I had a small put option position in Phillip Morris. It worked out well as the market dropped and I made a very nice return.

In the early 90’s, I saw the recession coming and the subsequent market drop from that. Market sentiment was so bullish it only told me another big drop was at hand. Within a week, the market broke support and the sell off was underway.

Just after the early 90’s recession, I was laid up with a back injury and had a lot of time on my hands. Thinking what to do for a new career. What better field than a stock broker, I thought. I found a small brokerage company who sponsored me and became a licensed stock broker passing the series 7 & 63 tests. This was something I thought I wanted, until I realized that I would have to be pushing stock to clients that might not be the very best for them in their situation. In that business, it happens. So I canned that idea, but never stopped learning and dreaming of the day that it would all come together.

What I regret most of all was missing the big move of 1995. I was not in a position to take advantage of the move of the century. My professional career had taken a different direction and I did not have the luxury to take advantage of that market action. I did still follow it, because that’s my passion. I saw all the “would be” day traders try their hand at making a lot of money in the markets and many of them did. The problem is, unless you are equipped to handle all of the other factors that I will be mentioning in this site, you will lose, plain and simple and most of them did.

These new hopeful traders only saw one side of the market – UP. They did not educate themselves on how to handle a dropping market. They had been hypnotized into thinking that there was only one direction. Many people, on paper, had become wealthy, but it did not take long to show them that they were not worthy to hold onto their newly found gains because of the attitude that “this is easy”. It’s never easy and not without sacrifice.

Let me tell you from personal experience. Most people who are very successful in day trading have gotten beat up pretty badly, almost without exception. Their pride gets in the way, with them saying, “I can do this.” It doesn’t take long for them and others to realize that it is not easy, especially without mentoring or some professional training.

The year was 1995 and market was trading sideways to slightly up, with a lot of resistance overhead, and then it happened. One of the most explosive moves in stock market history and I was only able to watch it go by without me. It lasted uninterrupted for roughly 5 years, with a big hiccup in 1998, but back to new highs through the year 2000.

During this time I started my own little business of trading commodities. This was the actual products. Buying and selling. I had partners who put up the money and did the shipping. It worked out well. This was at the high of the market in 2000. The dot com bubble had burst and the whole market was coming with it because it to had become so overvalued by historical standards.

Again, I saw this one coming from a mile away. It was waving flags in front of me, saying again, “sell, sell.” I tried to warn those who would listen. At least I did what I could. During this big market sell off I was trading high volatility stocks and was doing very nicely. I was able to put together a long string of winning days, over a month and half straight. Things were going well and I was content with my method and results, when I was rudely interrupted. I suffered some medical problems that made it impossible for me to continue. I never gave up on my dream, though, through many difficult times and set backs.

That day has finally come and I am very thankful to my family, who has been very supportive, and to God who was there with me through all my trials. As I continue to move forward in life, I will be sharing my trading ideas and experience with a select few who also have a desire and passion to succeed in this business.

I love to teach this stuff. I believe this is a time of abundance and blessing. Sharing and teaching is a way of giving back some of those blessings. It could not have come at a better time. The world financial situation is not getting any better. I will be keeping my readers abreast of the real economic situation on my daily blog.

Trading the market is not everything in life and I have come to know that. I have learned to see things differently as I have gotten older and that’s good. Knowing who you are as a person is so very important before you begin trading. I take time each day and thank God for my current good health, my family who loves me, friendships that I have built up over the years, and my involvement in my local community. This, I believe, is true wealth.

I live in a small town in Northern California. It is in a valley surrounded by mountains on all sides. Elevation is about 2,500 feet, so we get snow in the winter and I love it. I moved here from the San Francisco bay area after my two children were grown, over 3 years ago now. It was the best thing I could have done.

I live with my wife in a modest home and do enjoy a little gardening and my new Australian Shepard dog, “Buddy,” who has just been great. I always wanted a dog and now have the perfect place for one. He keeps me in shape. I do a lot of hiking, exploring, and some fishing with my free time. I live between two small towns of about 7oo people each, but have a bigger town of 7,000 just 20 minutes away. I and my wife Angela like to go to Ashland, Oregon just over the border for a variety of activities and cultural experiences.

It’s a different life, but I love it and again thank God for it. I am spiritually minded and it has served me well. It gives me hope in so much more than we are able to see in the world around us. I believe it is my destiny to help others and I feel God has given me a gift of giving. I need to be faithful and continue to pursue the gift He has given me so that I may be able to bless others in the coming days ahead. This site is a part of that. I pray that God will also bless you with what I write here and on my website to fulfill your dreams, and that you too will take the blessing and share with others your resources and talents. We can all do our part to make a difference.

May you be richly blessed all of your days,

Vince

For more information you can email me at vinnie@sniperdaytrading.com.

Related posts:

1. At last, an up day
2. Federal Reserve takes drastic step, Buys 300 Billion in Treasuries
3. Sentiment numbers stronger than expected

This is the sell-off I saw coming the other day, but it got a little delayed by the Fed announcement and maybe other things. The market did not want to go down on cue and thought it would hold up a spell to get some on thinking that we were going to continue straight back up to the top.

That may happen, but things don’t usually move in a straight line, at least not at this juncture. This move down is actually a key component to establish the next move, which ever way it decides to go. This move down will be the road map as to the next move as in a game of chess. The players are just positioning their men to take down a bigger army. Who will win the battle? Then next, who will win the war? Those are questions we are not able to determine at this time, but this setup is key.

The sell-off in my estimation, has at best, a little more to go. We are establishing a pivot point that is going to determine the next move. It is possible that we just continue the sell off down and take out the previous low and then some, but something is telling me that may not exactly happen. I always say, that we need to keep an open mind and look both ways before we go into traffic, so we don’t get hit. Get it wrong and you could be road kill. Don’t have it all on the line, not ever, no matter how sure you feel you are about a move. That said, the possibility exits for this kind of scenario.

Tomorrow, we continue with the sell-off after the market get the unsuspecting to bit on a rally long. The day has the makings for a trend day short after the initial up move. To everyone’s surprise sometime before the end of the day, we get large buying interest and we close well off our lows. This sets up for a reversal day rally the next day and over the coming days we challenge the pivot high that was established today and take it out for a sprint back up to the previous highs recently set.

That would be quite a spectacle for the trading and investment community to see. The market sentiment is a bit too weak for a sustained down move from here. Don’t get me wrong, anything can happen at any time and we always need to remember that, but this to me seems like a senario that would currently take many by surprise. As of last week the professional newsletter writers were only 35 % bullish. That is a figure that in the past has sparked rallys of significance. Now with todays sell-off, they made their new poll numbers as of the close of todays sessions. With it being a large down day, we could see many on the fence jump into the bearish camp and lose heart for this bull move. That could influence the market sentiment even more. Those people send their market forecasts to the public all across the world, giving them there call for the stock market, as well as numerous instruments. The main thing is, that they are usually wrong and giving that advise to the public at large, gets them to make the wrong call as well and lose money. That is just how it works, always has, always will. The majority never get it right and that is something that can be tracked and traced, amazing.

The above scenario may or may not happen,  but I think there is a good chance it will. They may try to hold it up for an extra day before it plays out, but we will see.

Today I just took a couple of trades and have a chart of it below. The first trade was for 1 point short and the next trade was for .50 point and 1.50 points. The larger portion was on the second half and was enough to get my daily goal. It only took about 15 minutes, which is what I like. Get in, get out and be done with it. I know without a doubt I could have picked up a bunch more points today. The price action was real good. The volume was high and the market was not messing around with all that slow action or no action I should say in the afternoons as of late.

It was good to see a little life. I am sure it will pick up as soon as the right catalyst triggers it. Picking up a few points in all of that action is not really that hard. Timing is the thing. If you think about it, that is what stands in front of so many traders who are on the verge of bringing it together. TIMING. Do you have it and if you don’t, how do you get it.

Many times traders do have it, but they just dont’ know exactly how to line everything up. Many have tried and tried, but it seems to just slip through their fingers every time. Having belief is often not enough.

Every trader needs to have a written plan of action to trade the markets and do it successfully. No plan, no success. You can not leave this to chance or a feeling. You need to be able to duplicate your efforts again and again. That means you need to do the same right thing again and again. If you don’t have it written down, how will you know if you followed it?

Excellent timing is the key. When to go long or short and when to wait. Waiting is itself a “Trade”. When you are waiting that is a trade decision and is just as much important as putting one on. Getting your first trade right in the session is very important. Exercise excellent timing, relax, take a few deep breaths and get plenty of oxygen in your lungs and wait for it to come to you. When you see it, don’t wait and second guess yourself, “TAKE THE SHOT”.

Good Trading, to all !

No related posts.

Well, I can’t cry over spilt milk now.  Actually never really lost any milk. Let me explain.

Over the weekend, I was thinking about which direction this market was really going to take. I could see on Fridays close their was not going to be any big changes by mid day and that we were going to close the session neutral. I was talking to a trader on Friday and made that comment to him after a target area was hit.

Sure enough, we closed pretty flat and or neutral on the session. Earlier on, we did hit a target area that I picked out from the previous day. Fridays flat day built up a lot of positions on both sides of the fence and as I commented a few days ago, that the “Market” was soon going to show its hand.

Today gave us a little more insight. It sure looks like the 50% mark will be completed and are currently less than 100 points away from doing so. As I was saying a few weeks ago, “So close, but yet so far”.

Todays close on the Dow was 10,227 and the exact number on the 50% mark is 10,314.  So, that is 87 points away. It sure is going to be interesting to see what happens after that number is hit ? The S&P’s number is 1120 and that puts us at 27 points away. With the average S&P point equivalent to about 10 Dow points, we are 270 Dow points away, based off of that relationship. That right there would put us up roughly 200 Dow points over the 50% mark if the S&P hits its 50% retracement point.

It is clear to see that investors are running a bit scared, but not scared enough to stop buying. They are buying quality issues as represented in the Dow. I mentioned this a couple of weeks ago. It does not always mean the rally is over, but it is rotating.

One thing I had heard was, that Jim Crammer on Mad Money (TV Stock Show) was saying that he was bearish. Then I looked up the sentiment numbers on Market Harmonic’s and saw that the bearish sentiment did increase by 2.5% last week. That tipped me off, that there was a high degree of likelihood we would in fact at least see one more push to 10,314 on the Dow.

We made it through October, typically the worst month on record for the Stock Market, a plus. Would it not catch a lot of bears off guard if the Markets shot up to the higher range of its retracement levels of 62%. Now that would get some attention and all the bears by then would turn Bullish, a clear sign a short-term top at least may be in place?

Here is Thursdays statement from my blog for the days ahead:

Let me spell this out, very clearly. The Dow and S&P have to break a new high to keep this thing alive and It needs to happen here soon. If the last pivot low on the Dow and S&P get taken out, you are going to see a lot of selling. More than we have seen in some time. That is the long and short of it. The market can do what ever it wants, I only identify that there is overhead resistance just above us. If it gets taken out and a rally comes in, great. That is what I like to see right now anyway. All I know is, the move from the March lows has almost been satisfied by retracing back 50 %. (S&P 1120 and Dow 10,300) I don’t know what that is going to do to the overhead resistance? Will it be that if it gets broken, it will clear the way for yet higher prices, no one knows?

Just wanted to put Thursdays comments up. It still hold true. investing with long-term money I would stay invested as long as the Dow and S&P do not make a lower low and so far, they have not. The Nasdaq on the other hand has. The broken support can act as resistance as it trades back up into the overhead supply. We shall see, it is almost like a “Thriller Mystery”, or maybe a better comparison is “A Big Time Wrestling Match”, where the outcome has all ready been decided, it’s just that we the public don’t know it yet. That is a topic for another day, but I would say and interesting point for conversation.

Below is a cash chart of the Dow, S&P and NASDAQ Index’s. Actually, it is a short video, showing the three charts side by side. I have a few clear turning points based on this time frame as well. Also, I have some circles marked, showing the occasional reversal by what I call a “Tail”. I did it in an hourly chart, then changed it to a 2 hour chart. Still about the same. No big deal, but at those tail or reversal point, usually prices turn in the opposite direction. Another example of flushing out the public first before the money can be made, against them, (the public).

Currently we have established the highs and lows, so making any trading decisions will not be that hard to spot. Before the market changes direction, it will not be obvious to most people, that is why, when prominent people on TV start talking about new directional changes, I automatically think the other way. It has always been like that. Over decades, I remember “Time Magazine” making and calling tops and bottoms, always wrong. Newsweek the same, once it is obvious to the public, only then will the market turn against them. That is how the game works. Those who don’t know how the game is played, GET PLAYED, dont’ let it be game over.  

Related posts:

1. Contrarian Thinking for Today Stock Market
2. Stock Market Building Up Pressure, tomorrow could be the day
3. Key Stock Market Turning Points

All I can say is, “What a day.”

I did not know that today was a Fed decision day. Shame on me. I usually check the economic calender for that. I don’t usually pay too much attention to news, because it always shows up in the price anyway, but that is one I always look for – because of the explosive moves following the news.

It usually happens at 11:15 am West Coast time and I was in a trade just before the announcement, with only 1 contract and then, boom, a 10 point move for the S&P in minutes. I re-entered for another move up after a consolidation for another 11 point move and again I only had on 1 contract. I kept re-entering long, and some short, to the very top of the market.

The S&P hit 800, which was the support at the purple trend line that I had talked about a couple of months ago. Support, when broken, usually then becomes resistance and the market traded right up into that resistance. After noticing that,  combined with the fact that now we had traded exactly to a 62% retacement from 873, the last recent high, to 666, the last recent low and back to 62% retracement at 800 and previous resistance, it made more sense that this would be a higher target for the market to trade up to. And it did – with me in it.

Once the top was reached I saw a good spot for a short and went with it, still trading very light, I think I had 2 contracts there. That was good for about 12 points to the downside. I must have had about 50 S&P points in all, which is about 25 times the amount I need to get my daily goal of 2 points, but that would be at 5 contracts. I traded very small once my equity started to get over $1,500, but it added up real fast for a finish to the day at $5,500 after commission. I took 33 trades total. Yes, that was a lot. But it still turned out better than 75% winning trades in about 3 hours. I have a couple of short video’s showing some of this, take a look below, at the end of the first one is where the Fed released the news and the market shot up.

I must say, that I was a little surprised that the Federal Reserve said that it was going to buy 300 billion in Treasury securities on the open market and 750 billion more in mortgage backed securities, bringing their direct involvement to 1.25 trillion. This is the first time they have done this since 1960. Does anyone know what that means? To me it looks like there was no one to buy the treasuries. China said last week they were very concerned with the U.S. debt market.

Do you know that the Federal Reserve is a private corporation for profit and is not a federal agency. It’s as much Federal as Federal Express. If you did not know that, all you have to do is Google it. The Federal Reserve is owned by a group of private banks from the U.S. and Europe. Basically, the government brokered out the job to a private banking corporation. I know this may be a shock for many, but people are reacting to the news like this is a good thing. This group is beyond reproach and no one has ever performed an audit on this group.

It is relative to the markets and to the economic equation because, while it is holding interest rates down for now, it will have a reverse effect in the near future. The Gold market did not like the news at all trading up nearly 6% for the day at 965 an ounce. The dollar did not like the news at all either, dropping against all major currencies. But the stock market did like it, or so it thought.

It is going to be good for the market in the short run – how long that is, I don’t know – but in the long run, it will be disastrous. There is so much money being floated out there right now that no one can keep up with it.

Here is another thing you may not have known. The total bail out so far is said to be 8-9 trillion dollars. That is a lot of money. Again, why is that relevant? It is going to cause inflation like nobody’s business. All I can say is be careful with your long term money. Let’s hope the market moves up over the next few months giving those who want to get out of their long term investments an opportunity.

Everyone has been trained in thinking, “it will come back, it always does”. This time could be different. Do your own research and think for yourself. Don’t listen to the experts and don’t even listen to me on these matters, but spend the time and check it out.

If you do a Google search using “total bail out so far”, you will get a few figures, but they are all up in the range I mentioned. It is nowhere near the figures we hear on the nightly news.

Sorry for the ramble, but it kind of ticks me off when I hear news like this. To those who are considering a career in trading and have the risk capital, the time to make money is now. The markets are moving nicely up and down and there is profit to be had for those who can wade their way through the noise.

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

http://www.screencast.com/t/u9xVvzQlpfW             Some of today’s live trades

http://www.screencast.com/t/kTfMA2×13w              Some of today’s live trades

Related posts:

1. Federal Reserve Interest Rate Decision 6-23-10
2. Federal Reserve Interest Rate decision tomorrow
3. Traders watching Election and Federal Reserve Wednesday

It has been a long time since we have had a move up and it sure is welcomed. I had gotten that feeling that we would rally today, when I heard Obama say that Americana’s with the means should consider to buy stocks. It is not very often that you will hear a sitting president, to buy stock in the market. I think he got tipped off by Goldman Sacks. If we do get a rally, everyone will be saying, “see, Obama told us the bottom is in and we should buy stock”.  Knowing how people think, heard mentality, people went out like good little citizens and did what they were told, buy stocks. I am being a little sarcastic and maybe I should not be, but I can not help myself right now. I do not ever remember a president making a market call like this today and I have been following the markets for 25 years. Oh well, there is a first for everything.

The rally was welcomed, I am sure by all. I thought yesterday, that as the market closed close to the low of the day and Tuesday is the day that the sentiment numbers come out by the news letter writers, that the numbers must have dropped again, which is good news for the bulls. I will post those numbers tomorrow, because I get them two days late. I am not a subscriber so the best I can do is a little delay, I will take it. My guess is that it dropped 3-4 % to 23 or 24, with a reading under 35 as a traditionally a bullish signal. You need to remember, that all of the times we were in more or less, normal market conditions, these readings were very very accurate. But as we find ourselves in this massive sell off, which has happened before, like in 2000, sometimes the readings get stretched to extreme levels before the market reacts. This is such an environment currently. When the numbers got to the mid 20’s, we had a big market bounce off the bottom in November of last year. Since then the numbers started to rise and are now getting back to what they were before, pending Thursday’s reading. So, I am thinking that we may be in for a bounce up for a few day’s. In addition, I heard a lot of people starting to say that much lower levels are coming, like now. When you hear people on TV and Newsweek, Time, etc. saying the same thing, look for a move in the opposite direction. Those people are rarely right and it usually can pay to bet against them. With all that being said, the current trend of everything is still down. Let hope we get some follow through this week.

The market did sell off just at the close, by 100 Dow point and 10 S&P points, in just a few minutes. That sure was not good, so for tomorrow, look for a continuation of the pull back initially and watch for a rally back up. It is possible that we could get a few days of consolidation at these levels to give us a better footing for an up move, but we will just have to wait and see.

Yesterday, I made a comment about the Pension Funds being underfunded and I found a chart of just such a story, explaining the facts. Below I will post a chart of some of the underfunded companies that are having the most problems. Over all, I hear there is a $ 409 billion dollar shortfall in the pension funds right now. Last year there was surplus and now, a big underfunded liability. These companies have some time to make up the difference but if things do not improve soon, it is really going to hurt. They are regulated by the government to make these pension contributions to cover future retirement obligations. They are currently only funded to 60%, which leaves them 40% short. They are going to have to take more of there earned income and kick in a bunch of money to make up the difference and that is going to hurt earnings potential. On Wall Street, its all about the earnings. “What have you done for me lately”. That is an old saying in my family and is appropriate for the current situation hear. Oh, the reason for the big shortfall, is that a lot of these companies invest that money in the stock market and with valuations going down so much, it is putting a big strain on there balance sheet. This can turn into the old snow ball effect, if things do not turn around soon, lets hope. Just reporting the facts here.

In my day-trading effort, I only had a limited amount of time to trade and did so for only 15 minutes in the morning. I did get my daily goal with all gains. I placed 5 trades with 8 exits in the morning and as I said all were gains, nice. I found a few minutes in the afternoon session around 11 am and traded for about 25 minutes and added nicely to my gains. I posted around $1,300 for the day with 22 pieces of profit and 3 losses, 88% . I started out with a 1 point gain on 5 contracts for $250 profit, then started to reduce my size, played it safe, because I had a limited amount of time. If I had draw downs it would be harder to come back, not having the time. It worked out just like I wanted and so, I chalked up another days worth of gains. I think I am now about 30 days in row of posting solid profit every day, no loosing days. I had many days of profit before that, but in the last week of January, I started to post every day, no exceptions and it has been going great. I have had struggles and came close to my daily loss limit, where it is, that I will have to stop for the day, but my streak is alive and I plane to keep it that way, by trading smart and following my rules as best I can. Below is an equity chart of the days gains and a chart of some of my trades in the 233 tick. I am taking these trades in the 100 tick, but I am looking at other time frames to give myself a larger view and perspective.

 http://www.screencast.com/t/E8oNvlEsc6r         Today’s equity chart

http://www.screencast.com/t/KTX51dkd               Some of today’s trades in 233 tick

http://www.screencast.com/t/dOBUnSMx              Chart of, some company pension shortfalls

http://www.screencast.com/t/MAWnN1pts7b     Day trade chart of IBM, my promise from yesterday

Related posts:

1. Called Live, Short Term Top In Today’s market.
2. Sentiment numbers stronger than expected
3. Federal Reserve takes drastic step, Buys 300 Billion in Treasuries

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

Related posts:

1. Very important post, long term picture
2. Important Market Update
3. At last, an up day

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

Related posts:

1. Interesting Trading Lesson Today
2. Trading Discipline, Part 4
3. Trading Lesson: Part Four

Hope everyone is enjoying the sample training series. I have gotten positive feedback so far, so I know it has been a help for some. Please feel free to comment.

The market is holding on by the skin of its teeth, hugging the bottom support line we have talked about for so long. Yesterday’s reversal was good, but there wasn’t any follow through in today’s trading. It is still technically positive in the daily chart, but we will need some follow through here pretty soon.

I did check the sentiment numbers and they went negative by an additional 3%, which is good for the bull argument. A reading at 35% or below is considered a bullish signal and we were at 35 and went down to 32. This figure is a weekly poll taken to identify the number of professional stock market newsletter writers who are either bullish or bearish ( up or down). They give their opinions each week and it is tracked and recorded. Other groups take that information and post their results, having somewhat turned it into a market timing tool.

The funny thing about it is that they don’t take the advice, they trade in the opposite direction of the writers  and profit from the standard herd mentality that exists on the street. I have been following these numbers since the early 80’s and found them to be very accurate. It is not fool proof, nothing is, these guys could get it right one of these days, so be careful. I still think there is a bounce in the cards coming but we shall see. I will post a chart of the S&P cash to show you where we are over the weekend.

My day trading went well today, posting 3 gains in the early morning, picking up my daily goal in about 20 minutes. I remember them as +1 point, +1 point, and +1/2 point.  I was only trading for 1/2 point on the last trade because I just wanted to cover commission cost. I was just fine with doing that, even if I could have gotten more, which I could have as I remember. I want to try and stay in control, knowing that I only needed a little more to get my goal. If I had taken a stop on the trade, I would have had to stay trading and that means more exposure to the market.

This is a very conservative approach. I am trying to exercise mental discipline in my trading to show that I can get what I want out of the trading day. I believe that if I want to take 6 or even 10 points out of the market each day, that I could do that as well, but I would have to work at it a bit harder and stay a while longer. I have definitely done that before and it’s ok, but I need to be prepared for it and plan it. Today, I did come back and picked up another daily goal in the afternoon. That was the plan. I treated it just like a new day and did what I always do, pick off a few trades to add to this mornings gains. A nice way to go into the weekend.

Below, I have the training video as well as the screen shots of today’s trades. I will post more on the current events on Wall Street this weekend, so check back . I wish all the readers of my blog a most excellent weekend.

Vince

http://www.screencast.com/t/CUArEYcq              Day #5 sample training video

http://www.screencast.com/t/1vYMwyRObtE     This moring’s equity chart

http://www.screencast.com/t/Bdtv2315l               This mornings trades

http://www.screencast.com/t/bftPp4q5M             This afternoons add on equity chart

http://www.screencast.com/t/ODI2×97z               This afternnons trades

Related posts:

1. Day four of sample training & What a reversal today!
2. Day two / Sample Training
3. Training series / First in a nine part series

I want to take a moment to explain a few things on the trading vehicle that I am using.  I trade the S&P 500 E-Mini futures.  It’s called the “Emini” because it is a smaller version of the large contract.  I say contract because that is what I am trading.  “A Contract”, an agreement between another trader, fund manager, investment bank and so on.  They are wanting to set this agreement up to protect their investments from a market drop so they may be wanting to sell this agreement with someone who will contract with them, anyone, around the world or in the same city as they are.  Someone who will assume the risk they are seeking to alleviate.  You are not really investing in the companies of the S&P 500, but are piggy-backing on their daily movement.  As the real index moves up and down, the futures move very close to it.  Sometimes above it and sometimes below it, in anticipation of where people think the market will actually be in say 1, 5, 60 minutes or more from now. 

As I mentioned in an earlier post, this is a very large market with participants all over the globe controlling assets in the 100’s of billions of dollars all there for different reasons.  All I have to know is why I am there and continue to exploit my advantage.  I am taking a calculated risk and will be rewarded for my experience, patience, discipline and foresight.  When I am on track with the right mental preparedness, I am hitting in the 90% + winning percentage area.  My targets are usually small, but not always. It depends on market conditions, and my losses are very small when I get them.  Losses are a part of it, and I take my losses just like other speculators. But not as often as the winners come in. 

I will be posting a video of some of my trades and still shots as well.  In addition, I will be posting an equity curve of my daily profit after commissions so you can see how all my trades are coming in.  More to follow with a lot of education on what I am doing and how I do it for the select few that will learn my method. And that it is a “method” and not a “system.”  When someone learns the method they will be able to adjust for market conditions. Whereas a system will start to show multiple losses in not being able to adjust itself as I am able to.  The goal is to be profitable every day and get my paycheck sent out to me on every Friday for half of my profit. 

Why do I trade?  Quite simply, to make a living and have the free time to be where I want to be, doing what I want to do.  It is the best job in the world for those who can learn to master their emotions and stay the course they have set for themselves. 

More to come!

 Vince  -  vinnie@sniperdaytrading.com

No related posts.

There are millions of contracts traded in any single day, changing hands from one person or group at a time.  The reason for all of this is to create liquidity for those who want to purchase a kind of insurance policy.  You see, large pension funds, banks, mutual funds (which there are thousands of) have the responsibility of growing the money that people have entrusted to them.  It is their job to increase the assets they have through strategic investing.  The money they handle runs into the billions of dollars.  If a period in time comes (and it always does) when they feel vulnarable to a market drop, they will want to sell their investments to protect their profits, thus doing their job.  But, if they go into the open market and start selling, they will push the market down and others will begin to do the same and a very large sell off could turn into a panic, for no good reason. 

This sell off they are trying to protect themselves from was only a short term drop but now has turned into a crash bringing everyone else down with them because it is also their job to protect the assets of their clients and so on.  The way around this is to sell Futures contracts against the positions that they hold, a kind of insurance policy.  If they are right and the market does go down as they predicted, they can go into the futures market and sell contracts (leveraged agreements) against those positions and make a profit on the decline in value. They are taking a loss on the actual stock that they own, but they are making up for it with the profit in the drop of the futures contract.  They put up a small margin or deposit against the postion, say $3,000 dollars for every $60,000 worth of stock they own.  If the market drops 5% on them and their portfolio drops by that much as well, they made up for it with the profit from the increase in value of the futures contracts they sold. 

Who did they sell it to?  Well, to speculators like me and others.  They sold because they thought the market was going down but I believe it is going up. So, I basically sell the contract to them stating that if the market goes up (against the position they took) they will be losing money to the speculator.  This is the price they are willing to take in order to protect their position from a large drop in the market that they are not willing to accept.  But they may be willing to accept a 1% loss, thus the cost of the insurance.  They can cover their loss or get out at any time.  Their loss becomes the speculators gain. There needs to be someone willing to take the other side of the market at all times to create the liquidity that I was talking about earlier.   This does serve a vital purpose in our economy and it goes on in many other commodities. 

Example:  If a corn farmer has a crop coming to market in 2 months and he needs to get $5.00 per bushel to break even, anything over that will be his profit.  If now at this time he can get $6.00 per bushel, he can make a contract on the futures market for that $6.00 and be assured he will get that price when his corn is ready for the market place, and be assured of a profitable crop return. If, at the time of harvest, his corn is currently selling for $7.00 per bushel he does not get the $7.00 but only the $6.00 he has contracted for. The speculators will make the difference because they assumed the risk.  By the same token, if the corn is only at $4.50 per bushel, the farmer will get the $6 dollars price everyone agreed on when the contract was set.  Now the speculators will be losing to pay the farmer his higher $6 dollar price.  These contracts are done by matching up those who want to buy with those who want to sell. 

Millions of contracts are traded each day on the S&P 500 by those who think they know where the market is going in the next week, day, hour, minute and sub-minute.  I am part of the pool of people who is willing to contract with others all over the world taking the opposite of their positions.  Only one of us is going to be right at that given moment in time.  It is my job to be right more often than not. 

As of late, I have been right about 80-90% of the time.  My position targets for the most part are very small, but highly accurate.  My loss is about equal to my gains but not in all situations.  People will say that you need a 2 or 3-to-1 gain-to-loss ratio to be successful.  That may to true for the style they are trading but not in all cases. 

I have three programs to instantly go to based on market conditions.  Most of the trades are done with the smallest of movements and will take usually less than a minute to complete.  Sounds fast, and it is, but once you see what your part is, you will breathe a little easier. 

Well that is all for now, I need to take a break.  I will continue this topic in future postings.  I will also be posting live charts of these trades so all will know what’s going on.

God Bless you all, until we meet again.

Vince

No related posts.