Finally an exciting market!  

Yesterday, we used our fabulous 5% Rule™ to call the weak bounce line we expected on the S&P at 2,127.50.  As it turns out, the S&P finished to day at 2,127.02, so back to the old drawing board to find out why our model is misbehaving, I suppose…

If you think calling market moves within 0.48 (0.025%) is useful for Futures trading – you’re right, it really is! A friend of ours said yesterday:

Good day for me too on the futures. Much easier when the market moves pretty much one way all day and that is the direction you are trading. thanks again Phil. I may be getting the hang of this. Made more today because there were more times when I wasn’t trading, which Phil has been telling us (me in particular) for quite some time. 

Today, in case you can’t see the chart it’s 2,142.50 or bust on the S&P as it NEEDS to take back that strong bounce line to show any real strength.  If we get there and it fails, we can short at that line (2,140 would do) with tight stops above or, if 2,125 fails, we can short there too.  We expect at least a head fake higher in the morning, in the very least. 

Notice the word “short” keeps coming up and Craigs made his money on the short side as we were all shorting yesterday because we knew Monday’s move was BS (see yesterday’s post) and the call I made in the morning that the S&P would head lower from 2,137.50 was good for an extra $1,000 per contract at 2,117.50 but we took that money and ran as it is goaaallllllllllllll on our chart and, as noted above, now we have our next two entry points.  

Keep in mind that, even though we draw you a pretty picture, our 5% Rule has NOTHING to do with TA.  We are not TA people, TA is complete and utter BS.  Nonetheless, we use TA all the time because 90% of the traders out there are using it so it becomes a factor in our Fundamental Analysis but, frankly, if 90% of the people sold Apple when the moon was full – we’d factor that in too, so it’s nothing special about TA – we’re always looking for idiotic crowd behavior to bet against.