Daily trading plan for September 9, 2010

Recent market movement has been confusing for many traders — understandably, given the chop chop chop inside the narrow range of the last few days.

The ES is is overbought in the short term, but almost every night there is a pullback in overnight trading that releases the overbought pressure. In the past two days dip buyers have kept showing up in the support area.

Today is rollover day and yesterday’s close was the end of the classic monthly and weekly bullish period. ES has already had 4 narrow range days. It is congested around a small top range. At this point It should either move up decisively, or move down decisively — and it should do it soon.

After 11am we begin trading the new contract ESZ0, and the price movement then will show us if the ES will move up and breakout through the 1104.50 resistance line to keep going higher, or fall back to the support area or lower.

Date Added: 2010-09-08 19:30:07
Downloads: 36

Trading plan for Septermber 8, 2010

After the holiday the stock market was hit by increasing concerns that the stress tests for European banks were cooked to conceal the true fiscal health of the euro zone. Both the SPX and ES gave back a small portion of the gains made in the past three days. The ES closed down 12.25 points.

The short-term is overbought, and a pullback to test the break-out area is necessary to smooth out the overbought condition and make a resumption of the rally possible. Today we may see a continuation low move early in the morning if ES fails to hold above the 1087.50 line in overnight trading. 1076.75 is the key line for today. If it holds, the C top target will remain intact. A move under 1070 will eliminate the C move, and trigger declining wave 3 again.

In fundamental terms the past rally had no reason and support. In terms of technical analysis, the price rallied from an oversold condition. Now ES moves into overbought territory. Choppy and unstable moves should be expected, as we approach rollover day and the 10th anniversary of the 911 event.

We may also see government action. Preventing a price decline here may be what the Fed is really hoping for.

Date Added: 2010-09-07 18:25:47
Downloads: 35

Trading plan for September 7, 2010

Members, download the file for the full trading plan.

The S&P 500 cash index (SPX) closed at 1104.51 on Friday, covering its losses from the previous two weeks, and kicking off the month of September with a solid three-day rally. It added 3.7% for the week.

This week we have a rollover day on Thursday and volatility will continue to increase as we approach the rollover. If economic reports are better than expected this week, watch for a further rally.

E-mini futures contract (ESU0)

ES moved together with its big brother the SPX last week. It looks more likely we will see a C move instead of the declining wave 3. But we can’t eliminate the second possibility completely.

Because Sept. 9 is rollover contract day, the September contract value will move close to the SPX cash price, and we (along with the rest of the market) will begin trading the new December contract. Our CIT day will be on Sept 11.

A breakout above 1120 will eliminate the possibility of a declining wave 3 entirely. In that case the C top around 1135-1137 will be the upside target.

Date Added: 2010-09-06 09:07:12
Downloads: 67