Sunday, October 28, 2012


Here is one of the things that concerns me about the bigger picture of the stock market. You can see that for quite some time the Nasdaq has been the leader being relatively stronger in price at most recent price junctures. That has led us to ever higher prices. You can especially see the divergence at the lows several months back where the ES went right back to the lows and the Naz stayed quite a bit above them. Then as the rally started and we got the first pullback notice how the Naz had gotten back to the highs before the plunge that took us to the low and the ES got nowhere near it. This told us tech was leading which is what we want for a rally and off we went.

We now have a completely different picture with the NAZ showing significant comparative weakness to the ES. The ES has just retraced back to the prior pivot high where the NAZ has gone quite a bit below that corresponding price level. This is not what we want to see for a continued strong stock market. I still think we are in bounce mode for a few days here but after that from a short term stand point I am going to be looking for sell signals.

The other things that is a problem is that the NAZ is one week away from potentially shifting it's trend to down with my bands on the weekly chart. If we have a big up week this week that would be nullified so this week is pretty important. Here is a chart of a couple of different looks at the Presidential Cycle. I have mixed views on cycles. I do like them but I often find myself drifting away from them for some reason.

There have been instances where price has drifted quite a bit away from the cycle predictions so this is not the holy grail by any stretch. However, what does concern me is they both show a decline happening at the beginning of the year. When we combine that with the Naz getting relatively weaker than the ES we are starting to see some things lining up here. The trend has not changed yet and I think the FED will keep away from a big disaster until after the election since they are trying to re-elect someone right now. After the election all bets could be off here. If Romney were to win it will be interesting to see what happens with the FED. Maybe he is different than he represents but he certainly does not seem like a guy who would be a big fan of the FED buying ES futures. There was an interesting article the other day I came across about one of the reasons for the big down day last week was that most of the traders at the FED was off for the day. I guess on some level they need traders but it seems a little weird to have the word traders and the FED together. I think their strategy is to just slowly leak various things over time so that when it comes out that they admit to buying ES futures it will not seen like a big deal. Politics is fascinating even though it is incredibly frustrating. The strategic aspect of the lies, deceptions, partial truths and word twisting are very interesting.

Here is the case for a bounce.

Last week I mentioned that we needed to see a close below the open in the VIX to indicate a buy was confirmed and we got that on Friday with the PPT save that came in right on schedule. Over time this strategy of waiting for a close outside the bollinger bands and then the price to reverse and close below the open is about 60% accurate so it is nothing to write home to mother about. However, it does give us a good bias to monitor. As a result I think we are going to bounce for a few days here. There is a second qualifier I use for this that is proprietary to me that is not confirming this trade. Trades when confirmed by this tool have been very accurate but do not occur that often unfortunately. It does not mean that because that tool does not confirm this trade it should not be done it is just an observation.

Net net I am looking for a small rally here over the next few days then a sell that should be a larger trade to the down side.


The 30% has arrived and the transition so far seems to be going relatively smoothly to Vision. IRA's are not being handled correctly thus far. It appears the trustee has no way of distinguishing between them and regular taxable accounts. Stay in touch with your custodian and just be patient. They will get everything figured out eventually. 

I cannot for the life of me understand why they can't get the Forex stuff resolved faster than this. The only explanation I can come up with is that it is not in the attorney's best interests to do it because their fees would then be less. I really wish someone with the power of a Donald Trump would get involved in restructuring the bankruptcy process. There is nobody who could ever convince me that it is appropriate for attorney's to make millions while victims get fleeced. Perhaps a Godfather type resolution would solve this problem! The crime families have got it right, they resolve conflicts and disputes pretty efficiently don't they? The point is not to take that tact but at some point how many stories of people lives being ruined have to happen before something is really done about it. We know from the CFTC proposed regs that they have absolutely no interest at all in doing anything to prevent a PFG or MF from happening again. Now we know that not only did they do nothing to help prevent it but have no interest in stopping the next one. I can promise there is a next one and if we get into a big market slide again, more than one next one will take place.

They could have one sentence that would solve 100% of the problem.

FCM's will no longer have any direct access to segregated accounts. The funds will be housed outside of their accounts and can only be drawn on by the individual account holders. They need to make it physically impossible for these people to have access to the money, not illegal, impossible.

Maybe it is just me but it seems like every time some big scandal happens a GS or JPM person is involved. I think Gensler is former GS but not completely sure on that one.


Here is the plan for how we are going to go forward. Things are working out very well thus far in both services as subs who are enjoying the results know. What I intend on doing is establishing accounts in our company name that will just trade these trades only. There will be one for Bonds and one for the Swing Trades. This way we will have an actual account that trades every single one of the trades in our company. This is not as easy as it sounds.

I used to have hundreds of thousands sitting around before the PFG wipe out now I don't. I have established new trading accounts that I am trading that are far less than what I am accustomed to having. As a result I don't have a bunch of extra cash just sitting around looking for something to do. I should have enough once the initial distribution is available to me to set up two accounts. However, we have to open them in the company name which takes some time due to the process. I then have to withdraw the money from Vision which is going to take time. Next I have to deposit it into the company account, wait for it to clear, then redeposit it into a new Vision account. This is likely going to take a month.

Once it is all done we plan on also setting up an Auto trade program through Robbins Trading where people can sign up and get all the trades automatically done for them. The way it works is every time a trade is entered in the main account all the followers get the same trade. There are some challenges to this in that limit orders can't be done so I am trying to figure a way to deal with that since that is how we exit at targets. In any event once that is done we will have an option for anyone who wishes to trade them but can't get in front of the computer when they need to in order to make the trades. There is a charge for it obviously.

Eventually we will bridge into webinars and daily videos and all sorts of other things that will help traders. We are just getting started and the main focus is for the services to be profitable which they are. We are riding high now but as I keep saying repeatedly, it will not always be this good. There are going to be periods where we take losses I can guarantee that. In fact our very first trading the Swing Trades did take a loss and we have other trades that have lost in both services. This is part of trading you grind it out.


I just had a comment about what I should be doing in the last thread and it led me to a place I was intending to go all along, Guest Posts. I am going to open things up for people to make posts on things they wish to discuss and put out there. If you have something just draft it and email it to me at cj@wearefuturestraders.com. I have to approve it obviously and I will not nit pick the content I just have to make sure it is appropriate, no swear words or otherwise types of nonsense. Somebody mentioned they thought I should talk about expanded volatility so lets do it, send me the post. 

The goal here is to broaden this out some beyond what I can just do myself. Ultimately we will likely have a trading room for daily interaction but that is also a ways off. Baby steps for now.

Good Luck trading this week


Anonymous said...

hi Chris,

The idea of Auto Trade program is good for those who don't have time to trade or have small fund. For me, the program looks like managing a futures fund. However, some people may prefer to receive the trades from the current services and execute them personally. Hope you still keep the current services running together with the intending funds.


Chris Johnston said...

Nothing will change for those who trade themselves, it is just another avenue for those who either can't or don't want to enter the trades themselves. I have had people ask about this. I don't know how much of an audience there is for this but I was just trying to find a solution for those who have asked about this.

I am probably going to increase the price on the swing service at some point in the future but it will still be inexpensive. It is so much work to do this and stress $100 is just way too cheap but we are going to roll with it for now. I greatly underestimated the amount of work in all of this.

I think we have all the kinds ironed out of it now in terms of delivery of the orders etc..