There was early strength that reversed from 1455.75 on theSP futures on Wednesday, right in the first resistance zone at 1454.50-1455.50. The market dropped quickly, then after getting to 1452.50 on the SP futures, that first decent pullback caught a bid and the market turned around and rallied back. The SP futures moved on up to make several stabs just over 1457.00 on the SP futures, and was rejected 3 times. One more attempt failed at 1453.75 and after cracking the updated 1456 level, the downside gathered steam. The washout reversed off of a 1451.50 low on the SP futures at 2:55 pm and the market ended the day in uptrends.
We got the range-bound action expected on Wednesday. There was a lot of volatility within a fairly narrow range. As long as the market can keep coming back after being knocked down for only a few hours, nothing bad is going to happen.
Expect some more of the same on Thursday. If there is early strength and the move fizzles in the first 40 minutes of trading, we could get another early selloff like on Wednesday. On the other side of the coin, if the market opens lower, look for a good reversal after the downside momentum dies and the market turns up. At these levels, the rallies that go nearly straight up and then fizzle out asprices "slide to the right", set up shorting opportunities.
Sign up for our FREE TRIAL, and you'll get my nightly marketcomment as well as consistently accurate support andresistance levels for the emini SP, Nasdaq, and Russell.http://www.TradeStalker.com
Wednesday, February 07, 2007
How to Trade 1-2-3 Tops
How to Trade a 1-2-3- Top
Mike Reed is author of TradeStalker's RBI Trader's Updates.The 1-2-3 Top that you will read about below is oneof the many trade set ups that Mike has personally developedand uses in his own trading. Mike's support and resistancenumbers have been published on the internet since 1996. Hissupport and resistance zones are specific and incrediblyaccurate. He offers an unlimited free trial of his nightlyTradeStalker RBI Trader's Updates.http://www.TradeStalker.com
The 123 Top is a powerful setup in which the secondmove towards the top (or bottom) falls short of a double top(or bottom). The 123 Top is very close to the samepattern as the "second chance entry." However, it differsfrom the second chance entry by being the actual top orbottom of the day (to that point in the trading day, ofcourse).
In general, the 123 Top does not need a strong TICKextreme on the 3 position because the 3 pop-up is weakerthan the price pop at the 1 position. When the top at 1comes at (or near) fixed RBI support and/or resistance, itstrengthens the odds of the setup and makes a TICK extremeat 3 unnecessary. When a TICK extreme does register at the3 position, it helps with timing and increases the odds ofgetting at least a scalp profit.
A TICK extreme at 3 also allows you to anticipate theformation of the 123 top and get in early, before thedescending part of the pattern is formed after point 3.
If there is a huge TICK extreme at the 3 position, becautious about entering too early. There may be a secondpush upward.
When there's not a TICK extreme at point 3 of the 123 top,wait until the price curls over from the #3 position, orfalls fast and pulls back a little.
When you enter on a curl top from point 3 (or a pullbacktoward the second top as above) your "risk" (the money atrisk, not the odds on the trade) isn't as good as ananticipation entry that would get you short very near thetop at point 3 (because your hard stop is further from yourentry, risking more money on the setup).
On the other hand, entries on a "down curl from 3" or apullback toward 3 make the trade a higher-probability entrythan the anticipation entry.
If you take the curl entry (after point 3) and the marketjust sits there, get out immediately and take another look. Don't sit and hope, no matter how good you feel about thesetup. This will give you a fresh look without your capitalbeing on the line.
Time in the market equals risk exposure. Staying out of themarket when conditions aren't favorable is an important wayto reduce the overall risk of trading. If a setup patternre-establishes itself, then a second entry can be taken.
Here is a 123 Top that I captured live on audio/visual. I'm"walking" you through this set up as it develops:
http://www.tradestalker.com/123-top-2.avi
Please Note: If you have problems viewing the video (you canhear but can't see the video) , or get a message that says,"error downloading codec" , you may need to install a codecTSCC file FIRST, it's a free download and only takes about30 seconds. Here is the link:http://www.techsmith.com/download/codecs.asp
Click on the link "Download TSCC Codec". The first box thatpops up, click "run". Second box click "run" as well. (Itsounds hard, but it was really easy)
Once you're finished downloading the codec file, c'mon backto this email and click again on this link:
http://www.tradestalker.com/123-top-2.avi
(give it a couple of seconds to start playing)
If you'd like to have access to my entire arsonal of set-ups, you can find them in my ebook, "Read the Greed-Take theMoney" http://www.tradestalker.com/ebook.htm
Good Trading,Mike Reed
http://www.TradeStalker.com
Mike Reed is author of TradeStalker's RBI Trader's Updates.The 1-2-3 Top that you will read about below is oneof the many trade set ups that Mike has personally developedand uses in his own trading. Mike's support and resistancenumbers have been published on the internet since 1996. Hissupport and resistance zones are specific and incrediblyaccurate. He offers an unlimited free trial of his nightlyTradeStalker RBI Trader's Updates.http://www.TradeStalker.com
The 123 Top is a powerful setup in which the secondmove towards the top (or bottom) falls short of a double top(or bottom). The 123 Top is very close to the samepattern as the "second chance entry." However, it differsfrom the second chance entry by being the actual top orbottom of the day (to that point in the trading day, ofcourse).
In general, the 123 Top does not need a strong TICKextreme on the 3 position because the 3 pop-up is weakerthan the price pop at the 1 position. When the top at 1comes at (or near) fixed RBI support and/or resistance, itstrengthens the odds of the setup and makes a TICK extremeat 3 unnecessary. When a TICK extreme does register at the3 position, it helps with timing and increases the odds ofgetting at least a scalp profit.
A TICK extreme at 3 also allows you to anticipate theformation of the 123 top and get in early, before thedescending part of the pattern is formed after point 3.
If there is a huge TICK extreme at the 3 position, becautious about entering too early. There may be a secondpush upward.
When there's not a TICK extreme at point 3 of the 123 top,wait until the price curls over from the #3 position, orfalls fast and pulls back a little.
When you enter on a curl top from point 3 (or a pullbacktoward the second top as above) your "risk" (the money atrisk, not the odds on the trade) isn't as good as ananticipation entry that would get you short very near thetop at point 3 (because your hard stop is further from yourentry, risking more money on the setup).
On the other hand, entries on a "down curl from 3" or apullback toward 3 make the trade a higher-probability entrythan the anticipation entry.
If you take the curl entry (after point 3) and the marketjust sits there, get out immediately and take another look. Don't sit and hope, no matter how good you feel about thesetup. This will give you a fresh look without your capitalbeing on the line.
Time in the market equals risk exposure. Staying out of themarket when conditions aren't favorable is an important wayto reduce the overall risk of trading. If a setup patternre-establishes itself, then a second entry can be taken.
Here is a 123 Top that I captured live on audio/visual. I'm"walking" you through this set up as it develops:
http://www.tradestalker.com/123-top-2.avi
Please Note: If you have problems viewing the video (you canhear but can't see the video) , or get a message that says,"error downloading codec" , you may need to install a codecTSCC file FIRST, it's a free download and only takes about30 seconds. Here is the link:http://www.techsmith.com/download/codecs.asp
Click on the link "Download TSCC Codec". The first box thatpops up, click "run". Second box click "run" as well. (Itsounds hard, but it was really easy)
Once you're finished downloading the codec file, c'mon backto this email and click again on this link:
http://www.tradestalker.com/123-top-2.avi
(give it a couple of seconds to start playing)
If you'd like to have access to my entire arsonal of set-ups, you can find them in my ebook, "Read the Greed-Take theMoney" http://www.tradestalker.com/ebook.htm
Good Trading,Mike Reed
http://www.TradeStalker.com
Tuesday, February 06, 2007
Market Comment 02/06/07
.................................................
TradeStalker's
R.B.I. Trader's Update
2/6/2007
(Published Since 1996)
...............................................
Dateline: 6:33 pm Eastern time, 2/6/2007
The 1810.50 level on the Nasdaq futures was our key level coming into Tuesday. The early pop to 1809.50 was quickly reversed and the drop to 1784.75 (24.75 points) was steady.The SP futures dropped to 1447.50 while the Nasdaq futures held its last support at the 1785.25-1782.50 area and the market bounced back. After a bounce, the market pulled back to make a double bottom and then turned back up. There was alot of chop-chop action going into the last hour of trading,but after going back to test the highs, the market backed off into the close.
The market made a good comeback after the early spill on Tuesday. The lows were at pretty good support areas,especially the Nasdaq futures. However, now the market is close to where the selling started on Monday/ Tuesday. It looks like we might have trading range conditions on Wednesday.
Look for the "sell early strength, buy the first decent pullback" type of action in the early going on Wednesday.Thereafter, key off the resistance and support areas.
Good Trading,
Mike Reed
Sign up for our FREE TRIAL, and you'll get my nightly marketcomment as well as consistently accurate support andresistance levels for the emini SP, Nasdaq, and Russell.http://www.TradeStalker.com
TradeStalker's
R.B.I. Trader's Update
2/6/2007
(Published Since 1996)
...............................................
Dateline: 6:33 pm Eastern time, 2/6/2007
The 1810.50 level on the Nasdaq futures was our key level coming into Tuesday. The early pop to 1809.50 was quickly reversed and the drop to 1784.75 (24.75 points) was steady.The SP futures dropped to 1447.50 while the Nasdaq futures held its last support at the 1785.25-1782.50 area and the market bounced back. After a bounce, the market pulled back to make a double bottom and then turned back up. There was alot of chop-chop action going into the last hour of trading,but after going back to test the highs, the market backed off into the close.
The market made a good comeback after the early spill on Tuesday. The lows were at pretty good support areas,especially the Nasdaq futures. However, now the market is close to where the selling started on Monday/ Tuesday. It looks like we might have trading range conditions on Wednesday.
Look for the "sell early strength, buy the first decent pullback" type of action in the early going on Wednesday.Thereafter, key off the resistance and support areas.
Good Trading,
Mike Reed
Sign up for our FREE TRIAL, and you'll get my nightly marketcomment as well as consistently accurate support andresistance levels for the emini SP, Nasdaq, and Russell.http://www.TradeStalker.com
Monday, February 05, 2007
Market Comment 02/05/07
.................................................
TradeStalker's
R.B.I. Trader's Update
02 / 05 / 2007
(Published Since 1996)
...............................................
Dateline: 5:54 pm Eastern time, 02/05/2007
The market opened lower on Monday, then popped back to the 1452.50 level on the SP futures and 1814.50 on the Nasdaq futures. That strength was sold and there was a washout to 1448.00 on the SP futures and 1798.25 on the Nasdaq futures. The market held and reversed fairly quickly and rallied back to test the highs before going into a little trading range. The 1810.50 level on the Nasdaq futures was the key end of day. At 2 pm, the SP futures quietly tested last Friday's high, while the Nasdaq futures reached 1810.75 and quickly reversed. That set the stage for some selling, on the Nasdaq anyhow, as the SP futures late move almost made a new high.
With this split market, the trading won't be so "easy". The Nasdaq needs to get through and hold over on a pullback that 1810.50 level to get in sync with any upside. That makes the Nasdaq futures a "short on the pops" unless /until that level is exceeded and held. The SP futures look much better,rallying to the 1454.00 high right before settlement. Trade only the best of setups on Tuesday until the market averages get in sync. Beware that, if the Monday afternoon lows are broken and the market doesn't snap right back, then a harder shakeout is likely.
Good Trading,
Mike Reed
Sign up for our FREE TRIAL, and you'll get my nightly market comment as well as consistently accurate support and resistance levels for the emini SP, Nasdaq, and Russell.
http://www.TradeStalker.com
TradeStalker's
R.B.I. Trader's Update
02 / 05 / 2007
(Published Since 1996)
...............................................
Dateline: 5:54 pm Eastern time, 02/05/2007
The market opened lower on Monday, then popped back to the 1452.50 level on the SP futures and 1814.50 on the Nasdaq futures. That strength was sold and there was a washout to 1448.00 on the SP futures and 1798.25 on the Nasdaq futures. The market held and reversed fairly quickly and rallied back to test the highs before going into a little trading range. The 1810.50 level on the Nasdaq futures was the key end of day. At 2 pm, the SP futures quietly tested last Friday's high, while the Nasdaq futures reached 1810.75 and quickly reversed. That set the stage for some selling, on the Nasdaq anyhow, as the SP futures late move almost made a new high.
With this split market, the trading won't be so "easy". The Nasdaq needs to get through and hold over on a pullback that 1810.50 level to get in sync with any upside. That makes the Nasdaq futures a "short on the pops" unless /until that level is exceeded and held. The SP futures look much better,rallying to the 1454.00 high right before settlement. Trade only the best of setups on Tuesday until the market averages get in sync. Beware that, if the Monday afternoon lows are broken and the market doesn't snap right back, then a harder shakeout is likely.
Good Trading,
Mike Reed
Sign up for our FREE TRIAL, and you'll get my nightly market comment as well as consistently accurate support and resistance levels for the emini SP, Nasdaq, and Russell.
http://www.TradeStalker.com
Intraday Update 2/5/07
.................................................
TradeStalker's
R.B.I. Trader's Update
02 / 05 / 2007
Intraday Update
...............................................
Dateline: 2:42 pm eastern time, es7h= 1453 nq7h= 1809
Keep an eye on 1810.50 on the NQ. If that is exceeded, and held on a pullback, then we could see a run higher. If there isa reversal around there, then a pullback to 1805 there wouldbe a key level for the market.
Good Trading, Mike
TradeStalker's
R.B.I. Trader's Update
02 / 05 / 2007
Intraday Update
...............................................
Dateline: 2:42 pm eastern time, es7h= 1453 nq7h= 1809
Keep an eye on 1810.50 on the NQ. If that is exceeded, and held on a pullback, then we could see a run higher. If there isa reversal around there, then a pullback to 1805 there wouldbe a key level for the market.
Good Trading, Mike
Market Comment 02/04/07
.................................................
Dateline: 5:59 pm Eastern time, 02/04/2007
The SP futures traded in the narrowest range since November21, 2006 on Friday. The volatility contraction tends to precede large range days, so we should begin the week with some bigger moves. The market is still overbought and sentiment is getting a bit too frothy. In addition, a narrow range day at fresh high ground has led to some hard sell-offs in the past. So, a bit of caution is warranted on the long side up here.
Since the post Fed rally started last Wednesday, the dips have been small and infrequent. The two biggest pullbacks on the SP futures were 5.25 points on Thursday and 4.25 points on Friday. If the Friday high at 1454.00 is not exceeded,then a drop of 5.25 points would make a retest of the Friday low. That test would need to hold, otherwise things could be changing short term.
Get consistently accurate trading plan each night in your mail box!
http://www.TradeStalker.com
Good Trading,
Mike Reed
TradeStalker's
R.B.I. Trader's Update
02 / 04 / 2007
(Published Since 1996)
...............................................Dateline: 5:59 pm Eastern time, 02/04/2007
The SP futures traded in the narrowest range since November21, 2006 on Friday. The volatility contraction tends to precede large range days, so we should begin the week with some bigger moves. The market is still overbought and sentiment is getting a bit too frothy. In addition, a narrow range day at fresh high ground has led to some hard sell-offs in the past. So, a bit of caution is warranted on the long side up here.
Since the post Fed rally started last Wednesday, the dips have been small and infrequent. The two biggest pullbacks on the SP futures were 5.25 points on Thursday and 4.25 points on Friday. If the Friday high at 1454.00 is not exceeded,then a drop of 5.25 points would make a retest of the Friday low. That test would need to hold, otherwise things could be changing short term.
Get consistently accurate trading plan each night in your mail box!
http://www.TradeStalker.com
Good Trading,
Mike Reed
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