Have A Plan But Don’t Fight The Tape
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Futures and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
A good friend of mine (and one of the best traders I know) repeatedly tells me that you have to have a plan but you also have to play the hand that is dealt you. Last night, I was bearish on the index futures as the previous day’s strong upside bias failed to follow through. In addition, this negative action was backed up with three indicators pointing lower on the Market Bias Page. This morning I was still bearish even though the Globex futures were trading higher. However, once the futures exploded (and held) on a reaction to a benign PPI number, it was evident that the market was headed higher. The moral, have a plan but don’t fight the tape.
For you breakout players, September Natural Gas [NGU9>NGU9], on the Momentum 5 List, is just shy of life-of-contract highs (a) and appears poised to take them out. Look for a buying opportunity here.
Source: Omega Research.
October Lean Hogs [LHV9>LHV9], on the Pullbacks Off Highs List, is a three bar pullback that closed fairly well. Look for a buying opportunity here.
Volatility Watch
December Gold [GCZ9>GCZ9] remains on the Volatility Explosion — Multiple Days List. Continue to watch for a larger-than-normal move as volatility reverts to its mean.
Best of luck with your trading on Monday!
Dave Landry
PS-Reminder: Protective stops on every trade!