Just a welcome and a caveat for our new readers, we need your help to be successful. We are not always in front of the screen, e-mailing about every wiggle in the market. To that end, we continually try to reinforce the tool sets for sound decision making.
That said, it’s incumbent on our clients to pay attention to the capital flows during the day and the major levels when they match up. Technically speaking, we’re in known territory in almost all instruments. The levels may have a little wiggle room to them, but not much.
The Short Term Trading community should have no problem whatsoever, getting into a short time frame chart and discerning the turns at the stated areas. This can be accomplished by watching for the market matches,” when Instruments align”, at the bigger levels.
Longer time frame traders can take advantage of the counter directional areas to adjust or get into positions mid week. If you missed it the first time, you generally get another chance.
Example…yesterday the Bunds, once again telegraphed the possible low in the stocks, by rejecting the 135.80-136 level. While, at the same time, the Aussie failed to reach 103 on the break. Price action, under the 103 pivot, was needed to confirm downside follow through in the equity indices.
There was no directional follow through in the Spu,Nasd, Bonds,Bund or Aussie
after London’s close. Call it what you will, no volume,the end of MOC orders, or capitol flow ceasing to chase direction at a level, it all adds up to re-trace bounces ( bounces opposite the prior direction). Assessing the size of the bounce is a subject unto itself, which we’ll save for another piece.
Point being, “WE TRADE TO MAKE MONEY”
The S&P has been trading 30-40 points directionally on average, then expanding exponentially from there. 1254 to the 1217 area is just one of those wiggles. All new weakness was needed under 1205+- a couple, for a new leg down.
If you’re contra-trend trading, book some money and then lower your stop. ( This is what we were doing with the Short S&P position…Contra-Trend Trading) If you’re a rabid day trading flipper, take your money and look for another trade.
Look for the alignments, across all asset classes, to alert you to setups when the Lemmings reverse direction.
Today…Good question
Euro…140.45 is a level I’d been looking at for a possible short. Today’s 200 day is just shy of 141, so it bears watching.
The Bunds, and the Bonds are at the lower end of the recent ranges…watch for stock tone.
S&P…1271 +- is the 200 day mvg avg. You would think you’d get some reaction off the level for day traders to utilize.
Euro Stoxx…24530 seems to up match with the S&P at the 200 day. The ultimate swing is higher, however it should have trouble at this area the first time up.
Trade your time frames and be patient.. This could take into the NYSE opening for the next move to develop.
We are coming into month end on Monday. I don’t see the market backing off much, we are higher on the week,month and year.
Model Trading Portfolio…Current Holdings
No Positions
Stopped out of Short S&P Futures
Medium Term View…
Equities
Our medium term view is that the Equity markets have put in a bottom for the next few months at 1070 SPU. We’ve been waiting for the past few weeks to re-load our longs around the 1163-71 area, based off the front month S&P 500 Futures, for a rally into year end.
Precious Metals
Looking for weakness into the first week of Nov. Then, if the technicals agree, we’ll re-purchase the metals for a longer time frame portfolio buy and Hold for our private wealth clients.
Bonds
30 Yr. Bonds …I’m treating 147 as the high for a long time. We’re looking to sell big rallies for the foreseeable future. This includes hedging strategies for our private wealth crowd that have Bond Fund exposure.