Results of Tuesday’s Best S&P Futures Turning Points: Buying 5183.00 picked the bottom of the session and ran 60+ points to the close. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

No qualified volume levels today. 

The World Index: (+100/-100) drops from +31 to -13 in a world of mixed sentiment and plunging volatility. 

Catalysts: Crude Oil Inventories @ 10:30. 30-year Bond Auction @ 13:01.

Quick Tip: ATR Exit

Yesterday’s buy was one of the best we’ve seen in years. It ran smoothly with a few pullbacks to form price pivots for a trailing stop that was never touched. 

One open trade management tool we have is the ATR extension. The black dotted line on the chart represents the 14-period daily average true range (ATR) added to the prior day session close. You can subtract it to get the ATR extension below as well. 

Price will frequently stall and even reverse from this level. Taking a profit target this way gives up nothin...

Results of Tuesday’s Best S&P Futures Turning Points: Buying 5013.50 was filtered out during the CPI release. The Short didn’t trigger. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4972.75 stop 4969.25. Short 5040.50 stop 5045.25.  

The World Index: (+100/-100) reverses from -25 to +36 with most major world markets Bullish on low volatility. 

Catalysts: Fed’s Goolsbee speaks @ 9:30. Crude Oil Inventories @ 10:30

Quick Tip: Swiss Army Knife 2

If you didn’t read yesterday’s blog it would be helpful to do it now. Here’s a link. 

We like Bollinger Bands as a technical indicator because they display most of the information we need to understand market state: trend and volatility. 

In reading his book, Bollinger on Bollinger Bands, I found a pearl of trading wisdom that stuck with me, and I use all the time. In my own words, “low volatility begets high volatility and vice versa.” 

Critics of technical indicators will comp...

Results of Monday’s Best S&P Futures Turning Points: Neither trade triggered. 

Today’s Best S&P Futures Turning Points (Entries filtered out during CPI release): 

Buy 5013.50 stop 5009.75. Short 5040.50 stop 5045.25.  

The World Index: (+100/-100) eases from -6 to -25 with most major open world markets Bearish.

Catalysts: CPI @ 8:30. 

Quick Tip: Swiss Army Knife?

While we can’t predict the future exactly we can approximate the future. 

Take price action for example. Price is either: 

1. Trending and volatile.

2. Trending and quiet.

3. Range-bound and volatile.

4. Range-bound and quiet. 

A complete trade plan would include strategies that prefer one of these market conditions so you can choose which has more edge at the time. 

Knowing the present condition is easy, the challenge becomes which condition is next? When will it change? 

Technical indicators are helpful. Yes, most are lagging and we’re always looking for leading information but used skillfully indicators can he...

Results of Thursday’s Best S&P Futures Turning Points: Shorting 4909.75 offered a 9.25-point run. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4892.50 stop 4886.75. Short 4887.50 stop 4893.25 if price falls below and retraces to entry. 

The World Index: (+100/-100) drops from +19 to zero with sentiment mixed. 

Catalysts: Non-Farm Payrolls @ 8:30. Revised UofM Consumer Sentiment @ 10:00. 

Quick Tip: Finding Edge

Every trader and any worthwhile educator of traders talks about edge. It’s what the casinos have. You can win any given day, but they will win every day. Edge = advantage. 

Edge is also mysterious to many traders. How do you find edge? Research is the best start but what are you looking for to validate it? 

Here’s a simple exercise to find and validate the edge in any trading strategy. 

1. Determine your entry and stop loss rules, not your profit targets. Give your stop loss more wiggle room than you would tr...

Results of Wednesday’s Best S&P Futures Turning Points: The buy at 4885.00 only reversed for 5.25 points during the end of Powell’s Q&A. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4835.25 stop 4829.50. Short 4909.75 stop 4913.75. 

The World Index: (+100/-100) rises from +6 to +19 with sentiment mixed and low volatility… except the BSE in India up over 8% the last two days. 

Catalysts: Jobless Claims @ 8:30. Final MFG PMI @ 9:45. ISM MFG PMI/Prices @ 10:00. 

Quick Tip: Exit Ideas   

I’ve heard real estate investors say that the money is made when you buy right. While that’s partially true In the markets, the liquidity and volatility we have that they don’t means the real money is made (or lost) in the exit, not the entry. 

Losses are easy. They’re pre-planned and acceptable before entry. 

Market conditions are important when choosing your profit targets. Is price moving fast or slow? Is the expected range wide or na...

Results of Monday’s Best S&P Futures Turning Points: Neither trade triggered, levels stay on the chart.

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4870.50 stop 4866.25. Short 4867.00 stop 4871.25 if price falls below and retraces back. 

The World Index: (+100/-100) remains at +7 in a world of lower volatility and mixed sentiment. 

Catalysts: Richmond MFG Index @ 10:00. China is looking at a stock market rescue package. 

Quick Tip: Market States

Trading in harmony with the bigger picture trend is one of the golden rules. That’s only half your concern, though. The other variable you should consider is volatility. 

Combining trend and volatility you arrive at the 4 Market States: 

Trend with low volatility.

Trend with high volatility.

Ranging with low volatility.

Ranging with high volatility. 

Few, if any, strategies work well in all the Market States. If you’re struggling to get consistency with a particular strat...

Results of Friday’s Best S&P Futures Turning Points: Shorting 4752.00 stopped out. Buying 4701.75 missed filling by one tick, a 50-point runner .

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4701.75 stop 4696.00. Short 4780.00 stop 4785.75.

The World Index: (+100/-100) improves from -43 to -29 with Asia more Bearish than the west. 

Catalysts: Fed’s Bostic speaks @ 12:00 PM. 

Quick Tip: Discretion

If you look back to Thursday’s blog (click here for all 500+ issues) you’ll notice the suggested Buy was 4704.00, same as today. Looking at Friday’s blog you’ll see the suggested Buy was 4701.75. 

Why did I change the entry by such a small amount? 

The high-volume that creates these levels offer entry ideas. Sometimes other information is available suggesting you adjust your entry. They could be rules from another strategy, chart patterns, economic releases, and other indicator results. 

I chose to adjust the entry on Friday...

Results of Thursday’s Best S&P Futures Turning Points: Neither suggested trade level triggered. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4701.75 stop 4696.00. Short 4752.00 stop 4756.25.

The World Index: (+100/-100) dumps from +14 to -43 with most major world markets Bearish. 

Catalysts: Employment Situation @ 8:30. ISM Services PMI & Factory Orders @ 10:00. Fed’s Barkin speaks @ 13:30. 

Quick Tip: Volume Leads Price

For as complex and chaotic as the markets are, technical traders only have 3 variables to analyze. Price, volume, and time. Most technical traders agree that volume LEADS price. 

Price moving up with volume increasing is very bullish. It’s hard evidence that plenty of buying interest is happening. Conversely, price moving up with decreasing volume is not as bullish. 

Price moving down with volume increasing is very bearish. More hard evidence. Conversely, price moving down with decreasing volume is n...

Results of Wednesday’s Best S&P Futures Turning Points: : Shorting 4777.00 filled in the Globex session last night running for 9+ points and still open but looking weak. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

Buy 4704.00 stop 4699.25. Short 4800.50 stop 4805.50

The World Index: (+100/-100) jumps from +7 to +43 with most major world markets Bullish.  

Catalysts: Retail Sales, Import Prices & Jobless Claims @ 8:30. Interest rate cuts coming, risk on, Dow hits record high, others to follow. 

Quick Tip: Asymmetry

Interest rate cuts are now firmly on the horizon after yesterday’s FOMC press conference. We will see new all-time highs in all the stock market indexes. 

What does that mean for short selling? 

Historically, prices move up and down in impulses and corrections. There will be short selling opportunities. But with the bigger picture trend clearly up, those corrections will last for shorter periods of time. 

Gen...

Results of Friday’s Best S&P Futures Turning Points: Buying 4572.50 was filtered out during the Employment Report @ 8:30. 

Today’s Best S&P Futures Turning Points (consider wider stops and less size in fast moving markets): 

The volume levels are affected by rollover today and are filtered out. 

The World Index: (+100/-100) gains from +7 to +14 in a world of mixed sentiment. 

Catalysts: 10-year bond auction @ 13:01. 

Quick Tip: Futures Rollover

Futures contracts are buy/sell agreements between two parties. Every contract has a delivery date at which point the transaction ends and goods/money are exchanged. 

Many futures traders have no intention of fulfilling their contractual obligations. They’re either speculating on price direction or hedging against price changes. For these traders exiting the current contract before the delivery date and entering the next contract further out on the calendar is called rollover. 

The price difference can be an issue for some trading strateg...