Nothing Lasts Forever
The S&P and Nasdaq E-Minis are —
yes again — testing their intraday, monthly, and yearly lows
as we approach midday in what has been a rather
choppy Monday trade, yet still biased to the downside given our continuing key
13-minute, hourly, and daily downtrend supports. In terms of the underlying
equities,
(
GE |
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News |
PowerRating) is continuing its recent slide — down another 2% while on the
tech front the
(
$SOX.X |
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PowerRating) has been one of the main culprits — also down 2%
— while
(
CSCO |
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PowerRating) briefly traded below $9 — that’s n-i-n-e
–this morning.
Heading into the afternoon session, traders should take note of the potential
price vs. momentum strength divergence on both hourly charts, as well as the
continuing climb in all of the volatility indices, including the
(
$VIX.X |
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News |
PowerRating)
which is rapidly approaching 50 and finally aligning itself a bit with the
market drop which was an issue late last week. A turn on the combined 3- and
13-minute charts may be cause for a test-the-water reversal entry, keeping in
mind that work remains on the hourly if this barge is to turn for more than a
trade.
In terms of pace, I won’t be too surprised with a continued choppy trade as
market participants position ahead of the President’s speech this evening.
ES (S&P)Â Â Â Â Â Â
Monday October 7, 2002Â 11:30 A.M. ETÂ Â Â Â Â Â Â NQ
(Nasdaq)
Moving Avg Legend:
5MA
15MA 60-Min 15MA
See
School and
Video for Setups and Methodologies
Charts ©
2002 Quote LLC
Trends
Some ten months ago, the St. Louis Rams
thought they could never lose another game last year as they were dicing up
opponents left and right, until the Patriots figured out a solid plan to beat
them. Now every team in the league has dissected the Super Bowl video and “the
greatest show on turf” has now lost ten in a row, if you include the 2002
pre-season.Â
On the other side of the ball, the Patriots had similarly been looking
invulnerable up until a few weeks ago, having won 12 in a row including the
first three of this year where they absolutely decimated their opponents. Now it
appears teams have replaced the Super Bowl tape in their VCRs with the
Pats/Kansas City game of three weeks ago where the Chiefs were able to find and
exploit a chink in the Pats’ armor — even though the Pats won that one in
overtime — and now the best defensive team in football over the past year has
lost two in a row and couldn’t stop my mother from entering the end-zone.
So what does this have to do with trading, aside from buying some time this
morning as the market is in major chop mode. Simple:
Nothing lasts forever, whether it be NFL winning streaks, personal trading
streaks, or market trends … yet in the meantime, maximize the heck out of
them. I still see far too many traders sub-optimizing “trend”
opportunities, both in terms of market movement as well, as when it comes to
their own performance.Â
When your performance is flowing nicely, press it. That’s what the Rams and
Patriots did, and they both have championship rings to show for it. When the
market is trending on whatever timeframe you follow, press it. Yet in
both cases, be alert for signs of their end and be ready to adapt,
either by scaling back your trade size when a personal streak ends, or in terms
of market changes, by looking to reverse with the new trend, should one emerge.
I think most folks both underestimate the strength of market and trading trends,
cutting profits short in both cases, as well as not sensing when a tide change
is occurring. It’s a keen balance of having one foot on the accelerator, while
knowing right where the brake is and not using it until it’s needed.
From the
E-Mini
Mailbag
Don – Just a quick note to let you know I’ve been using your system now for 2
months and have been MAKING MONEY! Thank you so much, it is absolutely for real
– worth every red cent (and more!). –BB
Don – Just a note of thanks for a course well done. Although I’ve modified
several areas with my four years experience your course has served me well in
solidifying many concepts that never got pulled together into
one cohesive plan. This mornings market action was a gift and I was up 12 points
on my first trade on the S&P E-Mini. If anyone puts the effort into serious
study your course will reward them. Thank you. –J.E.
Hello Don. I recently purchased the E-Mini course and am very happy with it. I
have been trading a long time and this is one of the best things I have seen.
Congratulations on a great service. –H.C.
Good Trading.
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