TradeStalker's
R.B.I. Trader's Update
1 / 24 / 2010
(Published Since 1996)
...............................................
Dateline: 5:26 pm eastern time, 1/24/2010
The ES opened lower on Friday, then bounced to the updated
resistance at the 1111-1112 zone, giving a great low risk
entry on the short side and the ES dropped 10 points to
1101.00 in the first hour. A bounce then went back the
1111.50 level, right at resistance again, where we were able
to re-short. That led to another 10 point drop to 1101.25.
Then we then got a bounce to updated resistance at the
1104.00-1104.50 area, and after 1104.25 was reversed the ES
dropped another 12+ points to 1091.50. Then I gave 1092.50-
1093.25 for new resistance, and after reaching 1093.25 the
bounce fizzled and the ES dropped another 7.00 points to
1086.25 to finish off a big reversal week.
The Dow, SP500 and Nasdaq 100 cash and futures made new
intraday and closing highs for the bull move on Tuesday. The
market was ripe for at least a pullback, and the risk/reward
was strongly tilted in favor of the downside. The put
options that were bought near the Tuesday high were covered
way too soon in hind site, but there were ample
opportunities to re-short on Wednesday, Thursday and Friday.
The bigger picture top at 1147 on the ES looks to be in
place.
The three day drop covered 572 points on the Dow, 60 points
on the SP500 cash, and 105 points on the Nasdaq 100. The VIX
exploded more than 22% on Friday, showing a lot of
capitulation. The bigger picture internal gauges showed
negative divergence at the top, and those have turned
intermediate term bearish. However, just about all of the
short term overbought/oversold gauges are at oversold
extremes. The 3 day Thrust is at -.89 (+/-.50 normal
oversold) and the McClellan oscillator reached -243. Also,
the RBI Signal strength is in buy territory. If the VIX
reverses, then this should set the stage for a good counter-
trend move to the upside soon. A move back towards the
1111.00-1111.50 area will be sold if the market is still
weak. A test of the 1119.50-1120.50 area would be as far as
a bounce should go if the bears are going to stay in charge.
So, on Monday look for early weakness to be reversed and set
up a decent rally, especially if the initial resistance is
broken. If the initial resistance areas are exceeded, and
then hold on a pullback, then a decent bounce should be in
gear. If a bounce fails around the 1104.00-1104.50 area, or
below it, then the 1098-1097 area would become a support
area that would need to hold then to avoid another selloff.
If the market opens higher but reverses around the 1097.50-
1098.50 area in the first 30 minutes, that should set up a
trade on the short side for a pullback towards the Friday
closes, or lower.
March 2010 SP futures resistance
symbols: emini = esh0 / big contract =sph0
1093.00-1093.50
1097.50-1098.50
1104.00-1104.50
1111.00-1111.50
March 2010 SP futures support
symbols: emini = esh0 / big contract =sph0
1087.00-1086.25
1082.25-1081.50
1077.75-1076.50
March 2010 Nasdaq futures resistance
symbols: emini = nqh0 / big contract = ndh0
1800.00-1801.00
1811.50-1812.25
1825.75-1826.75
1846.50-1847.50
March 2010 Nasdaq futures support
symbols: emini = nqh0 / big contract = ndh0
1789.50-1789.00
1782.00-1781.50
1776.75-1775.50
March 2010 Dow futures resistance
symbols: emini = ymh0
10176-10181
10218-10221
10268-10273
10339-10343
March 2010 Dow futures support
symbols: emini = ymh0
10114-10111
10074-10069
10022-10017
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---------------------------
Good Trading,
Mike Reed
Copyright (c) 2010 by TradeStalker.com, Ft Wayne, IN.
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Disclaimer
The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy
or sell any security. Opinions are based on historical
research and data believed reliable, but there is no
guarantee that future results will be profitable.
We are not advocating trading futures. The prices and
contracts in the TradeStalker Updates specify a manner
in which you could trade. We occasionally mention the
SP500 and Nasdaq futures markets because it is
extremely liquid and tends to lead the other markets.
This is not an endorsement or recommendation of the SP500
and Nasdaq futures markets. The risk of loss in futures
is substantial. You can lose more than your original
investment. We are not Registered Investment Advisors or
Commodity Trading Advisors.
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