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Thursday, April 25, 2013


STOCK MARKET SELL SIGNAL - ONE LAST

 CHANCE





The above chart is the Bernanke 500 formerly known as the E Mini S&P 500. I have a very short term trading system I have been working on that enters at specific spots and exits on the first profitable opening. For Friday a trade is indicated one tick below today's low, it is a short entry. This system has no bigger overall significance, it is just a short term trade designed to get in and out very quickly similar to the Bond System. Most of my other techniques designed to catch more swing types of trades have turned up enough to negate a short entry. That situation could change in a few days but for now it is a no. What I am left with is just this short term system trade in terms of trading a short in this market.

We are getting nice relief rallies in the metals after the recent meltdown. One of the old adages is support becomes resistance, so if that is true the 1530 area should provide a good selling point for another leg down. It is a commodity just keep that in mind. Technical indicators have to re-cycle after you get a move as big as that because they get stretched to levels rarely seen. If you trade using them study what happens with them when these extreme short term moves take place. I think you will find that they give a lot of false signals following time periods like this.

Getting back to the trade above, you can see the momentum divergence that has been building with now a large 3 point divergence in place. There have been quite a few false setups like these since the FED took over the stock market so it is tough to have any strong enthusiasm about this divergence which in normal conditions would be meaningful. The trading patterns in this market are so odd now that I don't know what to make of them sometimes. We go through periods where the volume just falls off a cliff then out of the blue accelerates quickly. HFT they cry, perhaps, but that does not explain the periods of no volume in my mind. I wind up not trading this market as much as I used to because these patterns are so screwy my trades don't setup as much in the indexes.

Here is a general look of the Gold resistance setup.



Have a great weekend



5 comments:

Macro said...

Hi Chris,
How is your short term E-mini Bernanke 500 trade results so far this year? Do you intend to offer to your readers to subscribe, like the Bond system?

And waiting for your new website...

Take care.

S. said...

Hi Chris,

Nice outlook, I have been placing my sell orders under the market for breakout type of things the last weeks, hopefully we'll can get a reversal today too.

I'm also looking at copper, COT wise seems to be in a very good spot for a long to buy on a pullback? Also Heating Oil seems to have made a major low? Any thoughts?

Grts

Seb.

Chris Johnston said...

Macro the ES system has had 16 trades this year 13 wins and 3 losses it is up a smidge over $2k per contract, since it would probably require 15k or so, that gives it a 13% return YTD

Copper and HO, either of those really excite me here. I guess you could argue that the commercials are defending a major low in Copper but open interest is really high which is not normally the case at major lows. Heating Oil I am not seeing a buy there, there is commercial buying but against a big down trend so that is not a buy signal to me

Chris Johnston said...

typo I meant neither instead of either can't seem to get back to edit that for some reason

Chris Johnston said...

Ooops forgot to answer the question about the ES being available, perhaps in a few months, it is only generating about 4 trades a month so it may not be enough action for some people but it does make money