Ok, call me crazy, but its times like these where the markets make big moves that nice profits can be made, both up or down. I said at our last Saturday session that markets always tends to over correct and its these over corrections where profits can be had. You will not be right all the time (nobody can do that!) but by putting the risk in your favor, the odds or probability of success can be right where you want it.
Let’s quickly look at the last few days of market action, more specifically the S&P 500 E-Mini Futures. As you can see in the daily chart below it is showing weakness but hell, just a casual glance at the newspapers will tell you that…but if you look closely at the chart below you can see a few key support levels that will determine just how strongly you want to play a position; in other words, do you view this current pullback as temporary and pick up some Long positions or, do you say, hey, it’ll get much worse so I will go short and go over to the Put Option chain and load’em up!!
In this daily chart below the key level to watch is 1300 and 1277…both of these represent pullback zones of interest…should the markets decide to go much lower these levels obviously must be breached….if they are, then anticipate a very nice pullback to the low 1200 range…should the markets counter and begin to move higher, then you could dip your toe in the water and add a few Longs…I had a few hedges in place, one of them being Calls in the VIX (remember, as the markets move down, the VIX moves up) and since this indicator went up almost 40% over the past few weeks it was a nice payday for me….the other play I made was in Oil…I felt the initial move today up to almost $100 per barrel was overdone and played a short position in the futures markets for a nice fast gain…..
One other trade that may work out…at least I am playing the current market’s ability to over react…in the chart below you see Apple. You can quickly see how the market really took Apple to the woodshed over the past few days and even though I felt it was a bit overdone I wanted to see if Apple could rebound…today it rebounded directly off it’s 50 day EMA….that tells me many big boys stepped in and starting picking up shares…that shows strength…so I played a Bull Call Spread on this one looking for Apple to make a comeback, perhaps not up to its highs but at the least, recover some of its recent losses…
Folks, we had a nice Saturday session and I am currently researching the proper video camera to use to record these sessions for our remote members to view in our Learning Center on our web site….as soon as I have an update I’ll let you know…
Trade Smart — Not Often
Hey folks, just a quick update on my 10 Yr Treasury Future Trade…as you can see in the 60 minute chart below we’ve moved down to touch the pullback zone as shown in the chart…also notice that the pullback zone ovals (both yellow and teal colors) have now almost merged into one circle showing the pullback zone more clearly as time has progressed…this indicator uses a combination of Gann and Fibonacci to calculate these zones…I find this tool very handy…I have now lowered my buy stop to just above last evening’s high and closed half my position letting my other half ride as long as it keeps going down…let’s see how it works out…remember, I said in my first post on this particular trade that I’m usually in these positions for about 1 to 3 days so they tend to be very short, but a lot of fun!!
Trade Smart — Note Often
Hey folks, for those trading the Treasury (I personally love trading these instruments in the futures markets) 10 Year T-Note Futures it appears so far we’re moving according to how the chart technicals suggest….as you can see below we’re already profitable and I will now let the system just monitor my trade for me taking 1/2 profits off the table when the projected pullback zone is hit…or, I will be stopped out as also indicated on the chart…which way will it go? Nobody really knows…what you do is play a trade according to the the technicals where you are looking to put the odds in your favor…more on this trade as it matures…keep in mind for this particular trade I am using 60 minute charts so my stops will be set accordingly…these types of trades tend to run it’s course within 1 – 3 days…..
Trade Smart — Not Often
Hey Folks, just took a quick short position in the 10-Year T-Notes with my buy stop set just above these levels as indicated…for those of you that follow this market you’ll know we’ve been in a choppy trading range for the past week or so…we just broke out to the upside, however we’re hitting our resistance levels as indicated in the 60 minute chart below…I took a very small short position to see how it will turn out…perhaps we’ll trade back into the trading zone its been in or, we’ll further break out to the up side….I am not seeing any bearish divergence which tells me this move up is a stronger one than usual..after all it had to break out didn’t it? Anyway, on this trade I took a contra position…let’s see how it turns out….
AS a reminder for those local we’re having our Saturday Session this coming weekend…it should be a lot of fun assuming my voice holds out….
Trade Smart — Note Often