Sunday, February 24, 2013

Market Status and Projections

4:10pm est > Position Update : As expected Sunday the ES has confirmed a Bearish Head and Shoulder Formation announced one day before,

The Setup worked again: Targets 1, 2 and 3 filled and booked, last target available upon request.

Short from 1524.25 + 39 pts < Open Profits.


After droping below the 10 Day Moving Average on Wed Feb 20 and below the 20 Day MA on Thursday , and breaking the long term channel trend line , the ES found support at the CHVN Key Zone. The Day # 2 RSI( 2 ) Reading became very low and the VIX Count was at reversal level, then the Third Day BUY Signal was given on Friday to subscribers.

It was a winner again hitting all Targets on the way up. Of course if you have been following this Blog for a long time, you probably would have anticipated this High Probability Setup that has been discussed on this Blog many times before without having to be a subscriber.Eddie take note.

As you recall on the previous Sunday Feb 10 a very subtle , simple but accurate statement was posted
on this Blog : " The TRUE correction will most likely occur after the > FOMC Minutes Meeting on Wed Feb 20th " < and that is exactly what transpired.
Amazingly enough there was only one very keen person that noticed it or acknowledged it in StockTwits <

Projections : The ES has traded below the Daily channel established since the unfilled GAP on January 20 . What is expected is a retrace back up to the 61.8% at 1516.50 < Weekly Pivot.

It is possible it will start to form a Bearish Head and Shoulder Formation by testing between : 1522.50 and 1524.50 Key  Sell Zone < This scenario would be invalidated IF price action consolidates above this Zone. Then the 1530 weekly High will probably be tested and exceeded. Key Support : 1519.50 < Institutional Level and 1508.75 to 1512

If the key Support Zone does not hold then the H & S theory goes into effect and a bearish bias should be considered

Note that I don't predict what will happen nor am I firm in my view or wording. I expect certain behaviors in price action but failure to comply is an indication also. Will change opinion instantly. Market is the master .Think of trading like surfing. You can't create the wave. You can only  read and interpret what is coming & try to ride it using your personal skills, methods and tolerance for risk.
There is no right or wrong answer & someone else's method is not likely to suit your skills, risk tolerance and style. In my opinion: It is best to understand the auction process & what motivates players to trade. Then master a few tools. Limit risk. Trade with less stress and more conviction.
Continuously changing your method puts you back in middle of learning curve over & over. It may cause frustration , doubt & little progress.

Notice: Trading Futures involves substantial risk of loss & is not suitable for all investors. Comments on this Blog are not trade recommendations.
Your priorities: 1) Risk control and exercise mental disciplined, 2) Think and practice your plan thru before the open, 3) Trade & move on! don't judge your skills by a few losses.
You career as trader is determined by performance of large set of trades. Not the last trade or 2. Risk control keeps you in game and NEVER ever pay a fee or follow the advice of StockTwits GURUS teaching for a fee, especially when they don't post live trades or order entries ahead of price action, because their levels or " Zones " are very subjective and NOT proven with live trades.There are many people doing this in StockTwits and there is no accountability or regulation.

 The best and most effective way to learn this is NOT to pay someone else to teach you, but to do your own research , follow the price action and push yourself to find the clues of the market you are trying to master.
Jaguar Trader a.k.a Trader TopGun

America BEWARE :  One Nation Under > China

Sunday, February 10, 2013

The Next Market Correction

Of course a market correction is inevitable. The market can't go up forever. Everyone knows that. Still market tops always seem to "surprise" traders and investors. Yet, you probably learned in kindergarten how to avoid getting caught at the top. Remember the game of musical chairs? You needed to go with the flow, but listen closely to the music ( clues )

Unfortunately, for most traders "going with the flow" without listening to the market clues is all too often the real reason why a market's correction is not understood and accepted by most traders until it is too late to have sold at the top. This leaves most traders surprised and wondering why they didn't see the top coming. This is the process that "Mr. Market" has perfected in order to hurt as many traders as possible at each turning point.

The irony in this is that the market often does warn traders of which financial or economic headwinds might cause the next "surprise" correction well in advance of the significant market declines. But tops happen when too many traders aren't listening. And just like that game you learned in kindergarten, Musical Chairs, the traders who aren't listening closely enough to the market are the ones left standing with losses when the bull market's music stops.

I think if you polled traders in the U.S. you would find that most would agree that the financial problems in Europe are not over. But if your follow up question asked if Europe's problems were still our problem, the majority would likely answer "no". I'll admit that prior to this week I would not have ranked Europe's problems as high on my list of concerns for our market. But I've changed my mind.

The market has enjoyed a run up thus far this year that is literally worthy of the record books. In doing so, traders have focused on positive earnings reports and brushed off mediocre economic data as good enough to justify the move higher. Who am I to argue? The market knows best. However, the market also warns us of its strengths and weaknesses. And this week the market had its worst down day of the year. I'd bet that most traders have already forgotten about this day because the following days easily erased the losses and moved even higher.

Listen to the market. The forgotten down day (the biggest down day of the year) was a result of fears over Europe's financial condition. Europe's problems are not over, and if you believe that the market knows best, then there is still a risk that Europe may create problems for our markets.

I'm not interested in drumming up fear, screaming "fire", or predicting the inevitable correction will be brought on by Europe, but when the market leaves clues like this, I go looking for ways to be more attentive to important market weaknesses and price action hidden clues. This way, I can continue to follow the flow of the market but should Europe begin to develop into a "surprise" I will have seen it coming, and avoid being that last trader standing in the market's game of musical chairs.

There are two scenarios that will probably play out this coming week. First one is that there will be a GAP Down on Monday < TTT Sell Day and will most likely close the open Gap between 1506 and 1508 and find support at 1502 to 1501 or > Second Scenario : The  ES will go up to the  1517 to 1519.75 Zone and encounter resistance there follow by a correction to the Gap Zone.The TRUE correction will most likely occur after the > FOMC Minutes Meeting on Wed Feb 20th.