Today is Wednesday, June 3rd and we are starting to get a pull back in the markets.

Today the markets made a nice late rally to recover from a steeper sell off it was seeing earlier in the day. The Dow was only off around 65 points, not too bad. With a close up off the lows, it sets the tone for an early rally tomorrow, but we may not be done to the downside. I

have no predictions on where prices are going at this point. I will tell you that we did hit an upside objective with the 940 S&P number being hit and completed that I had called. We are still in an uptrend, there has not been any damage to the chart and until then, you have to give the benefit of the doubt to the bulls.

There is some heavy resistance at the 940-950 area so that is going to be a very critical area to watch. I previously had in my mind that we would see some kind of a pull back and a lot of people will think this is more of a correction than it really is and start shorting the market. That could be a mistake. A pull back would be normal from here, but everything about this market right now is not normal.

I do  think overall we will see higher prices over the summer, that I am pretty sure about, but be careful, I don’t think it is going to last. By this September and October, we are going to have problems holding on to any meaningful gains going into the end of the year. I am a bear long term and do think the lows on the S&P and Dow are going to get taken out in a very big way. For now enjoy the mini Bull and get some of that 401K money back.

I am a bit cynical about how things are run around the good old USA. I believe the powers that be know exactly what is going on and when any changes are taking place. If you ask yourself, did “THEY” know that the market was going to tank last year?  Here, let me answer that one for you, YES.  Did they know that it was going to turn and when?  I can’t help myself, let me answer that one too, YES.

Our leader came out on the airwaves three days before the bottom on the S&P at (interesting number, I did not pick it) 666. That would make him a pretty good market timer if you ask me. Just three days earlier everyone thought the very worst. After that third day people who took his advice have done really well. I don’t know if anyone knows that, but it’s true.

What if people put a lot of new money in the market and it did not work out? Mr. O would not be looking too good right now and he could not have that.  The reason he could come out and make a stock market call like he did was because, well, you make your own conclusions. We hear that things are getting better and I am all for that, Ya-Ya.  I always say to keep an open mind and think for yourself. This will be one of those times, even as I give my opinion. That is all it is, my opinion.

In today’s trading, I did well, had taken a few small trades early, some up and some down, but saw a very nice high probability trade to capture a big move to the downside. I put it on, took not one tick of heat and picked up 6 & 1/4 points on that trade. I held it for a while which was painful in and of itself. I am not usually in a trade for as long as I was, but I played it for the extended move out of a higher time frame and that is what it gave me. I got in just as the market told me and got out just as it said “get out”. I did give it a few extra ticks of room, just in case it was a fake out. I have a chart of it below.  All in all, 3 times my daily goal. A lot of early trades were split trades with different exits.

Trading Lesson: Below is a short video of how you can use support and resistance by plotting  parallel channels. I cover how you can use them in your trading to give you some possible insight on where prices can go before they get there. It is not a science but it is something that gets played out everyday. Take the insight that I give you here today and check it out on the markets. It may take some time to be able to spot these, but when up and down trends play out, you should be able to apply some of these ideas to give you an edge.

Technical analysis is the study of price movement through patterns, support and resistance, and general price fluctuations. You can draw conclusions as prices move from one area of support to another area of resistance and use that information to trade accordingly. Even if you spot these patterns, you still have to know how to play it, with low risk entries in mind.  Check back for more insight and ideas.   Anyone interested in learning more please feel free to email me. I will do my best to answer your questions.

http://www.screencast.com/t/LuSFBV59R Today’s equity chart

http://www.screencast.com/t/3bLxmtzYZI One of today’s trades

http://www.screencast.com/t/HMBxbNpJ7 Trading lesson, 5 minute video