As Ralph Russell was forced to take a medical leave, we have a new Nasdaq trader starting this week (May 2002), Eddie Thornton. Watch the Nasdaq Real-time Signals to see his approach.
Eddie Thornton has an interesting and varied background including being inducted into the National Police Hall of Fame in Jacksonville, Florida due to his role in a shoot-out and rescue of a kidnapped woman and child. Read about Eddie.
High Unemployment - A Sign of US Recovery?
You've heard of "The Little Engine That Could?" This is more
like "The Little
It's not easy to put a positive spin on news such as our current 6% unemployment rate but the media sure does try. I'd like to see some evidence of the "US Economic Rebound" we're being fed in the nightly news.
Markets are down, jobs are lost, companies are falling faster than the leaves in fall. Analysts are being questioned as to whether they had a conflict of interest in the stocks they hyped, company's are being forced to correct their faulty (and questionable) accounting practices.
Additionally we've noticed a large head-and-shoulders pattern on the longer-term charts. Here is Charles' comments on this pattern:
"I was recently analyzing the longer-term charts of the indexes and decided to look at the monthly charts -- a time period I infrequently analyze because of my preference for shorter-term trading. What is setting up on the monthly chart is a very large Head-and-Shoulders pattern with a lower neckline and targets that are unbelievably low. Targets could be the 600, 800 or 850 areas!
The big caveat to these drastic lows is that the September lows and the 940 level must be broken.
One might ask how and why prices could move to such lows. From early 1995 to the highs of early 2000, price has increased almost 320% in just five years. This is a bubble by anyone's definition and one that is in the process of deflating.
The catalyst for such a reduction in valuations could come from a number of different situations already in place. Our civilization is heavily dependent on energy in the form of oil. Some analysts place the United States reserve of oil at about 3% of the world total. Continued dependence on Mideast oil will likely intensify friction in a region with an increasingly volatile leadership. If they turn the spigots off in a bid for greater global control, we would have little option but to militarily turn the oil back on.
Another possibility for a major market valuation contraction would be the detonation of a nuclear device in any populated area.
There is of course no mandate for price to fall to such lows levels but historically most bubbles do return to the level at which they began. This could mean the 600 or 800 - 850 level as mentioned above.
Often, the Dow will move in one direction and the Nasdaq will push in the opposite direction. This is a red flag for the S&P trader.
This type of inter-market push and pull will create choppy, consolidation type price action in the S&P. Participation is usually lower and the market may be pushed around by the larger locals. Trading in these types of conditions are usually a losing proposition; this type of price action is best avoided with the result that profits and the bottom line are improved.
This type of action often occurs after a day or two of trending or volatile price action. The market runs out of bullets for awhile and just chops around. The market has been especially prone to this type of price action recently because of the extended consolidation price has been in post 9/11/2002.
Avoiding poor price action caused by inter-market noise will improve your bottom line. Wait for the indexes to be in synch and your bottom line will be helped significantly.
Stuck Up Day - Reliable & Profitable Trading Approach
When this setup presents itself price often pushes much higher and holds its gains, giving this trade its name. These setups occur on a regular basis, usually several times a month.
Subscribers and current free trialers, read this Mentor Update for trading the Stuck Up Day by visiting the Mentor Update Library.
MENTOR UPDATES - LIBRARY
Our Free Trialer's Library are the Mentor Updates we make available to give you a taste of our great content. Subscribers have access to the entire library of back issues and also receive all new Mentor Updates as they are published.
Links to the List of Titles in the Mentor Update Libraries are on the left-hand side of the Mentor Updates Lessons page or directly at:
Both libraries require a user name and password for access. If you have not had a trial within the last six months, sign up now:
If you have had a recent free trial and liked what you saw, now is a good time to subscribe to ensure you won't miss any future Mentor Updates.
We have begun compiling a list of places to obtain data and quotes. Many offer "free real-time quotes" which generally applies only to paying customers.
These are bare bones listings only and not our personal recommendations. You must do your own due diligence.
If you hear yourself saying which direction you think the market will go, then you have stopped trading and have become a prognosticator: One who predicts like a palm reader. No one can predict the market. That is not to say that skilled traders cannot reasonably anticipate the market, which is exactly what they must do to capitalize on it, but no sooner does a trader think he knows than he gets his head handed back to him on a platter.
Trading "what is" is probably the most difficult aspect of trading. It is far easier to believe in your own predictions. I've watched traders stubbornly sell into a upward trend, trade after trade, refusing to see what is right in front of them. This is where looking for contrary information can be helpful.
Once you are in a position or gathering information to enter, check the data. Do your signals line up? Is everything right for taking the trade? If yes, then check one last thing -- what is contrary? Do the favorable outweigh the contrary? Then take the trade. If contrary is strong, perhaps you should rethink your strategy or pass on this trade.
If you only look for one thing, i.e. confirmation, then that is all you
will see. The obvious indications that your thinking is faulty will escape
your attention entirely. Be open to both sides of every trade and you'll
increase your odds enormously.
Economic Calendar: Know when key meetings are scheduled and avoid trading in front of any announcements by checking the Economic Calendar. We provide this information in the Overnight Updates as well.
Excellent Free Charts & Tools at Stock Charts.com with more available when you subscribe (naturally). This site has tools including "Market Carpets," "PerfCharts"(performance), "Stock Scans," and "Candle Glance Groups." All excellent new visual tools.
Sector Rotation - Besides daytrading, if you have a 401K invested in mutual funds, consider sector rotation when moving your funds. SmartMoney.com has developed some innovative charts called "Maps of the Market" which show a color coded, visual depiction of the various sectors (very similar to the Market Carpet concept used at StockCharts.com described above).
Yahoo's Free Historical Data - Provide the starting and end date, and the contract (such as SPB for the S&P 500, SPX for the S&P Cash, NDX for Nasdaq). The resulting data can be downloaded in the .csv [comma separated value] format which can then be exported into most spreadsheet programs including Excel.
Receive our Pre-opening Commentary for the S&P 500 and/or the Nasdaq 100 futures indexes. Early insights into the market based on our own analysis including important turning points, support/resistance levels, market reports due that day and whatever we believe will influence the open and first hour (or more) of trading.
OnTheOpen originally started as a Yahoo Group to provide our Pre-opening Commentary a few moments after our subscribers receive it. While the service works reasonably well we have no control over the delivery times and therefore, it may be delivered within moments or as much as 24 hours later. Therefore we have developed two options:
1. View the commentary at the Daytrader's Bulletin website every trading day.
2. Elect to join the mailing list for either or both OnTheOpen services and receive the pre-opening commentary directly in your e-mail moments before the open.
We will continue to post OnTheOpen through the Yahoo Groups for the time being as well. Sign up for the OnTheOpen Yahoo Group. This e-mail list is sent daily on trading days, and is an announcement list only.
These mailing lists will be used for no other purpose and will not be
made available to any other parties for any reason at any time.
What's Up At Yahoo? Undesirable Changes to Yahoo Groups Preferences
If you participate in any Yahoo Groups, you should be aware of recent changes made to your Yahoo Preferences. Following in AOL footsteps (they pulled this trick awhile back), Yahoo decided to make some changes and thought it made sense to reset ALL USERS preferences back to "Yes" for every option -- effectively setting thousands of people up to receive tons of spam mail from Yahoo. They claim to be giving people a chance to change their settings back before they'll start receiving unwanted e-mail and/or telephone solicitations. Gee thanks.
Change Preferences on Yahoo
To change your preferences back to "NO" you must manually do so. Here's how:
Our favorite trading books - Trading Methods & Systems
Check the list of our favorites, many of which are on our own bookshelves. Amazon and many other online book sellers are still offering unbelievable discounts.
(Remember, to close the new window that opens when you click a book link, use Ctrl + W)
S&P 500: Our cumulative net result up to and including May 3rd, 2002 on our model account is a gain of $30,325. This is a 101% year-to-date return or about a 300% annualized gain.
Nasdaq: Our Nasdaq service has just recently restarted with a new trader, Eddie Thornton, so no results are yet available.
These results are posted after each trading session in the Overnight Update and also can be viewed on our Cumulative Net Results.
Please note: Our beginning balance at the start of the year in our Cumulative Results is zero ($0). That is because that figure reflects our Real-time Signal's trading results only, and does not include our original account deposit.
We start the year with a deposit of $30,000 to enable us to trade three large S&P contracts. Consequently, for example if we list a $25,000 net result, this is in addition to our original account deposit.
It is our sincere desire that our web site and Real-time Signals service
is an informative and educational resource for you as a trader. Please
be aware that you may trade in front of us, with us, or after us and that
it is imperative that you make your own trading decisions based on your
specific risk tolerance and
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