I know my market newsletter is hardly great literature and not all my trades are winners, but as we have talked about many times, I am not here for levels, I am here to help give you a “feel” for the markets. That’s what I did on the floor for some of the largest customers in the world and that’s what I do for the MrTopStep Trading Room and friends like the PitBull. I may have missed the 1877.25 sales but this is what I put out on the chat when the ESM14 was on its highs : iceChat (04/01/2014 – 09:18:30): 1877.25 = first problem.
There are so many moving pieces to trading. Some are invisible and some are not. We already know the “invisibles” but identifying the visibles is something we can all do. One thing I personally think traders should do is open up a Google or Microsoft word document and write down some of the things you see and notice but no one talks about. Like when I picked out the late Friday Rip or Turnaround Tuesday or any of the MrTopStep Trading Rules. I understand the rules are not scientific but they are all part of how the markets move.
Over the last few weeks we have seen several of the rules work. Like the selling of the winners last week and the month-end and beginning of the month buybacks, like Google [GOOG] up +1.83%, TSLA _up +4.09% or BIIB up +1.28%. It is as the PitBull says, “water in the bathtub.”
Short & Sweet
I’m not going to do a big overview or story today. The market’s price action told the said it all. The S&P is going to 1900 soon but we all must remember what happens when everyone thinks and expects the same thing: the market will do the opposite , its how they are programmed. I learned a lesson in the last two weeks and that is, when your trading goes bad go back to the basics. Trade smaller and pick your spots better.
The Asian markets closed mostly higher and in Europe 10 of 12 markets are trading higher as well. Today’s economic calendar starts MBA Purchase Applications, ADP Employment, Gallup US Job Creation Index, API, Atlanta Federal Reserve Bank President Dennis Lockhart Miami speech on the economic outlook and St Louis Federal Reserve Bank President James Bullard’s welcoming remarks in St. Louis.
Whenever you use the word, “generally,” it usually means the markets are going to do the opposite. But that’s not how the price action feels right now. Last Thursday and Friday I started pointing out to the room that I thought the S&P was back and filling and that is exactly what the S&P was doing.
The big investment and mutual funds unloaded their big winners and with that the short sellers came rushing back in. When that happened, the MrTopStep rule that says it takes days and weeks to knock the S&P down and only one to bring it back went into effect. Not all the shorts covered right away and the timing was perfect for the buyers. They caught the sellers off base and got the backing of new money being put to work in stocks—a twofer.
It’s highly likely that the S&P continues up higher today. We have to get past the ADP Employment Report and start thinking about Friday’s non-farm payroll number that is expected to come in +175,000 to +275,000. 1885 to 1890 is the first real resistance in front of S&P 1900. We still lean to buying weakness overall but “you” can sell some rallies if you desire.
As always, keep an eye on the 10 handle rule and please use stops when trading futures and options.
- In Asia, 9 of 12 markets closed higher: Shanghai Comp. +0.56% , Hang Seng +0.34%, Nikkei +1.04%
- In Europe, 10 of 12 markets are trading higher: DAX +0.22%, FTSE +0.25%
- Morning headline:“ S&P Futures Seen Higher ahead of ADP Jobs Report”
- S&P Fair Value: 1878.07(futures 2.18 higher at 1880.25 as of 6:19AM ET)
- Total volume: 1.2M ESM and 8.2K SPM traded
- Economic calendar: MBA Purchase Applications, ADP Employment, Gallup US Job Creation Index, API, Dennis Lockhart speaks, James Bullard Speaks.
- E-mini S&P 5001851.50-8.50 - -0.46%
- Crude100.52-0.62 - -0.61%
- Shanghai Composite0.00N/A - N/A
- Hang Seng22377.15-132.93 - -0.59%
- Nikkei 22514808.85-254.92 - -1.69%
- DAX9561.65-134.119 - -1.38%
- FTSE 1006649.21-46.34 - -0.69%
- Investment & Company Information