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Thursday, September 01, 2011


HE'S BAAACKKK!




After an interesting 3 day trip I am now back at the ranch and ready to get to work again. I did not miss much while I was gone, and I always have the computer by my side whenever I go anywhere anyway so I can keep an eye on things. I will never allow a road trip to cause me to miss a trade I am waiting on. I have been talking about Natural Gas as a possible long, and we are now setup nicely for a move there. You could justify being long already on that trap new low that reversed immediately. I have talked about trap patterns quite a bit here, this was a good one. If you are not long, buying a pullback here could be a good play to catch this. We have followed the seasonal pattern pretty closely here recently.




Here we have the S&P 500 soon to be renamed for the foreseeable future, the Bernanke Stock Trading Index. He is going to take this back over again in a month or two. However, before that hostile takeover, we are going to have another decline. We see now some signs of trouble. The POIV is diverging quite a bit here telling us there is not accumulation going on during this rally, it is short covering. This is no surprise, I read recently that at the lows Hedge funds had very heavy short positions on, why not squeeze them a little? I don't think we can do anything with the information on what positions hedge funds have. It is just too hard to determine what they are doing, they could be arbing all over the place, so heavy one sided situations with them may or may not mean a thing. I do not as of yet have any of my patterns setup here to enter the short side, so I am flat in this market. It is clear that the DAX is the weakest of the indexes, so arguably, that is where shorting should be done. We also are right at a good seasonal spot for a decline, and again we have followed that map pretty closely recently. Net net, look for sells in the indexes now.





Copper is the next market that it is time to look for a sell signal in. I had mentioned a couple of weeks ago I was looking for a long entry here which I played, but I am flat in this market now and looking for a sell signal. You can see that my COT Synthetic shows there was no commercial buying on this recent rally, so that tells me that now that we are approaching the seasonal sell point, that we should take sell signals. Just to restate, the COT Synthetic continues to be a work in progress, but when it is this clear I pay attention to it. There is a big divergence between price and what this is saying, that should matter. This market is very closely correlated to the stock market, so it makes sense that the seasonal and price patterns are pretty similar here.





This is the COTTON market, and one I am looking to short today. You can see I have an alert set under yesterdays low which is where my sell orders are resting. It does not appear at press time here that this one is going to trigger but you never know. This one is against what my indicator is saying, but as you can see the indicator also indicated some buys incorrectly here recently. This is why I still feel this sucker is not ready for prime time quite yet. I show it for reference, but it is obviously not the grail. I am going to spend some time on this over the holiday to try and improve it to get around this problem.

Tomorrow we have the pleasure of dealing with the No Frickin Possible ( NFP ) way this is true report that will likely move the markets sharply intra day. Overall after that I think it will quiet down and be a crappy day to trade. However, that is just an opinion and we never know what will happen. We are about to have another teachable moment where we learn how stealing from the rich will create jobs. I fear that is likely to be the catalyst to drive the markets down hard once again. I hope I have a sell signal and am short before that speech, but I will not get short just because I think that speech will have a bearish effect. Fading his speeches when he first got into office was a fantastic strategy, but it has been erratic since that time. I don't know about  the readers here, but I know that personally, if my taxes get raised I will spend less, PERIOD. I suppose it is true that if you are a billionaire that won't effect your day to day activities much. However, what these thieves overlook is that these people other than those that inherit the money, are actually pretty smart folks. In one way or another they will manage to get ahead when he tries to penalize them and that will not likely benefit the masses.

I have done nothing on the short side of the Bond market, the strong seasonal and cyclical patterns here are the fly in the ointment. I do think if we close positive for the day in Bonds they could be shorted below today's low tomorrow, and I may play there I am not sure yet.

Good Trading to everyone

5 comments:

editor said...

Chris. Nice blog. I am too looking to short the bond markets. The set up here is exactly the set up in August 2010 a tweezer top high and the rejection of the 123 extenstion of 142 on teh 30 yr say the fibbers can take ti back down to 125'50. THe 61.8 of the rally.

Draw a fib and see the perfect zb movement at fibs and retracements june 09 low to aug 10 high.

the july low to recent high is 125 on the 61.8.

my blog is trendtriggertrade.com

my plan is 10% day trades, 30% swing(30 min) and 60% longterm(daily)

hope to cross an idea now and again.

Anonymous said...

Why short the bonds if we expect stocks to rally?

BQ

Chris Johnston said...

This is a possible setup not a trade, and I do not trade one market based on another. My short term technical stuff was indicating a sell if we broke, which we did not, that is why I was talking about a short. I don't trade based on my opinions thankfully. Just my style I am not saying that is the only way to trade, it is just how I do it.

sergio said...

Chris, I'm waiting for a good entry for Natgas too. Big pull back last to days I didn't expect. I think natgas is gonna trade even lower and test 3.7, at that point it could be a good entry, what do you think.

Chris Johnston said...

Sergio you could be right. At this point though this market is setup for a long if we start moving back up now. Most of my short term things will turn back up after another day it appears right now. I would love to see it take out it's recent lows and quickly reverse setting up a trap entry. I am not great at absolute price levels, so I have no idea about 3.7but this market is now ready to go it appears to me.