Here’s The One Strategy I’ll Be Trading All Day Long…Until Further Notice
Pre-market futures are up slightly off
yesterday’s late session slide. Shorting all rallies will be the mantra here
until that fails to work, be it today or sometime down the road.
ES (+$50 per index point)
S&P 500 actually spanned a 16pt total range
yesterday. Party horns for everybody! Seriously, we see how fast upside gains
can be peeled away with stock markets up in the stratosphere of overbought here.
Yes, stock markets are overbought on the long-term charts and yesterday’s bounce
was nothing more than opportunity for institutions to lighten their load here.
Anyway, we had buy signals in the ES near 1241
that went roughly +4pts in favor before topping out and turning over. Subsequent
sell signals near 1240 caught the sideways flag before price action dropped
better than +10pts in favor of this trade.
Classic gap & fail action… gap open continues
a bit, then flattens out and begins to post surge candles/bars in reversal
direction. Time to get shorty on days like this, especially when the hidden
pivot flips bias from buy to sell.
As for today? Short 1234.50 while expecting
1237 to hold any upside test and bullish above 1240 if broken & confirmed is our
outlook.
NQ (+$20 per index point)
Nasdaq 100 gave a buy signal near 1609 and sell
signal near 1608, both of which worked just fine. Today we short 1597 on a touch
and buy 1605 on a break & close of at least one 15min candle above there.
YM (+$5 per index point)
Dow Industrial futures buy signal came near
10690 while the subsequent sell signal arrived at 10690 to reverse course.
Upside worked a little, downside worked a lot.
Bearish at 10640 and bullish on a close above
10680 is the overall objective today.
ER (+$100 per index point)
Russell 2000 futures were extremely active
yesterday. Long trade signal near 667 worked for slightly better than +$300 per
contract before topping out above the 670 level. The huge, 12pt surge candle
downward was apparently a mistaken order entry of large scale. Traders who were
short into that and had the wherewithal to cover quickly had fleeting chance to
book +$1,000 per emini contract thru that move.
When it bounced back to reality, we had a
viable method signal short near 665.50 area. That one worked its way lower to
lows of 656.60 or nearly +$900 per contract move again.
From there the Russell snapped back +5pts off
the lows or +$500 per emini contract in short-covering reaction.
Back out the “fat-finger trade” surge candle
and compare that day’s action to the the other emini symbols above. Is it any
wonder why the ER volume swells day after day? There is so much more profit
opportunity in this one than all other combined, it is a proverbial no-brainer
to trade ER above all others right now.
As for today’s potential zones, short below 662
and long above 665 are the general guidelines heading into the opening action
ahead.
{Price levels posted in charts above are
compiled from a number of different measurements. Over the course of time we
will see these varying levels magnetize = repel price action consistently}
Email Of The Day
Each day I’ll answer one (or two) emails from TM readers in this
section. Today’s question asks if I ever have or intend to trade the German DAX.
I personally have not traded that index, but have charted it considerably thru
the years.
The DAX appears to trade very well and offers
plenty of profit opportunity more days than not. The only reason I’ve never
traded it is time zone: the hours simply do not fit my lifestyle.
If it weren’t for the FX, I’d probably work
with the DAX as well. FX markets are more dynamic than any stock index market in
the world, but have the same time-zone challenge for me based on the east coast
here in scenic Finger Lakes region of NY state. I’m about 300 miles from Wall
Street and too many hours away from the European session of trading.
I also have method members in our educational
room from all over the globe, including Japan, Hong Kong and Australia among
others. Those traders may be better suited to trading DAX than U.S. emini
markets, and anyone who fits the lifestyle of European market hours will do fine
trading the DAX. It appears to behave good as or slightly better than our eminis
for basic technical analysis, and I see nothing but good things for trading that
index.
Bottom Line
Yesterday may have been pivotal in the short term for bulls. If stock indexes
fail to bounce & hold into the weekend ahead, look for continued selling to
lower levels of support next week or beyond. Any short-term oversold conditions
are eclipsed by stock markets up on stilts here. The law of gravity has not been
repealed, and it is only a matter of time before some overripe apples hit the
ground.
Trade To Win
Austin P
(Free pivot point calculator, much more inside)
Austin Passamonte is a full-time
professional trader who specializes in E-mini stock index futures, equity
options and commodity markets.
Mr. Passamonte’s trading approach uses proprietary chart patterns found on an
intraday basis. Austin trades privately in the Finger Lakes region of New York.