If this market rallies to a new high, it may pull back to this support level first

Pre-market futures are muddling about as
we approach the open of trading today.
Stock index markets are heading back up
to test recent highs again… is this the time when upside breakout of year
2005’s current range will succeed?

ES (+$50 per index point)

S&P 500 opened in bullish territory via
yesterday’s chart map in here and kept pressing higher into the close. Today’s
support zones are layered in two-point levels down the scale. 1226 is likely to
hold any test if upside still has further potential to go.

NQ (+$20 per index point)

Nasdaq 100 has good support near 1586 and a
dual layer near 1583.50 which should hold if touched. Total 20pt range was a
$400 per emini contract span… not enough for me to work with. Let’s replace
this symbol with the S&P 400 Midcap index tomorrow… a solid trading vehicle
that does not have barnacles growing on it like the NQ currently does.

YM (+$5 per index point)

Dow Industrial futures are back up near the
venerable 10,600 level again. 10510 area is clustered support, 10530 first level
of clustered stop orders waiting below.

ER (+$100 per index point)

Russell 2000 futures also flexed upward to new
recent highs. The lows last week off Katrina news was yet another buying
opportunity for bulls in a market going sideways in rather dramatic fashion
lately. 668 and especially 667 are two levels that should hold any downside
tests, while 670 is the first line in sand for buyers to defend today.

{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}

Educated Guesswork

By far the biggest email question I have fielded in four years of
advisory service has to do with trade method subjectivity = discretion. In a
nutshell, literally thousands of traders have asked me (in so many words) about
the degree of discretionary decision involved in trade method(s) I use.

I do not trade a mechanical system, and I do
not trade anything with stringent rules involved. That said, any trader can take
any method and assign any number of rules for entry, exit and stop management to
suit their own individual taste. Each trader is different and unique: no one
EVER takes the same method or system and trades it 100% verbatim to anyone else
over a long period of time. That is not merely my opinion, it is an absolute

There is nothing wrong with trading a system or
any stringent rules-based approach. That works for some people to varying
degrees of success. I much prefer to follow a patterns-based method where
decisions are made to buy, sell and protect trades using some degree of
discretion. I have personally written hundreds of purely mechanical systems and
traded enough of them to know this: the same identical setups in any market will
have an infinite number of resolutions.

Said another way, the same exact scenario in
five different sessions can have five completely different outcomes as price
action moves from there to where it ultimately goes. Trying to pigeonhole random
flights such as financial market action has driven more than a few
ultra-engineer minds to the brink of insanity or beyond.

Trading is a learned skill, just like laying
bricks, carpentry or vascular surgery. Each of those pursuits take time, study
and experience for development of skills to succeed. Just because I can process
my own venison does not qualify me to perform successful vascular surgery on any
living thing. Likewise, just because anyone can open a trading account and buy
or sell emini contracts does not mean they can compete with experience market

After reading a few how-to books, watching a
couple of videos and dissecting some frogs, I can pick up a scalpel and cut into
flesh, and I can sew it back up when finished. Does that qualify me as a
successful, professional surgeon? Should I expect to support myself financially
as a surgeon from now on while I learn the profession? Is it at least remotely
possible that I might meet with disaster from not knowing what I do not know
about surgery somewhere along the way?

If you answered those questions the same way I
would, why is it that aspiring traders cling to the belief that it is possible
to glean a little knowledge, open a trading account and create instant success
along the way? Why is it that aspiring traders have always and will always hope
that some black & white, A-B-C mechanical approach to trading exists to negate
any learning curve involved?

We’ll explore reasons for such unreasonable
expectations the balance of this week. Good trading to you!

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.