June 25, 2013

Logical Market Update: We Are In The “Zone” – Bounces Underway – Additional Downside Expected

We Are In The “Zone”  – Bounces Underway – Additional Downside Expected


Monday’s early sell off dropped the broader indexes into their perspective support zones.   Tuesday’s trade kept alive the potential for a deeper push into support areas.  I’ve updated the charts below and indicated next important support.  Downside momentum has been building and Tuesday’s trade even though higher did little to relieve oversold readings.  There may be another day or two of upside consolidation before another drop lower tests support. 



The DJIA should find resistance for rallies in the 14813 to 14862 area.  Support at 14363 is the next level on a break below Monday’s lows.  A strong break with follow through of that level opens the door for a test of the 14000 level.




Resistance at the 1605 level, (basis the cash) for the SPX should hold if another leg down is expected.  Support remains at 1555 to 1550 and Monday’s trade tested that level with the low at 1556.  With downside momentum being the stronger at the moment an additional leg down is very likely to test if not break the 1550 level.




Russell 2000 (RUT)

The Russell 2000 has yet to hone in on support at the 914 level reaching 941 on Monday.  As in the other indexes the Russell still appears to need an additional leg down before the correction wanes and the advance resumes.  Resistance should contain additional upside at the 975 area. 




The NDX did test and hold support at 2837 on Monday.  The break and expectations for another down leg opens the door for a test of support at 2772. Resistance is at 2900 to 2920. 


Diversified Trading System


I continue to recommend as the best trading platform available to a broader range of traders from novice to expert.  The Diversified Trading System offers a cost effective product that allows a trader to enter into the “chaos” and trade more effectively.  


Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 


A newer member of the money management tools available from Indicator Warehouse is the Profit Finder – System Back Tester When implemented it allows the user to:

  • Immediately know the impact of parameter changes. 
  • Automatically reads all of your DTS entries and exits
  • Calculates the profit/loss of each trade
  • Performs a wide number of essential intelligence boosting calculations instantly
  • Provides solid details about the effectiveness of your trading strategy/ methodology/ indicators


The last two points above are valuable tools to use.  It will show you where some “tweaking” is needed to improve results through the back testing feature. 


My point on money rotation and sector rotation is similar to that on parabolic moves that they happen with frequency within many time frames.  As traders these types of moves can be a bonus for day trading or position trading so again don’t get caught up in the “what’s the catch.”    Realizing a rotation is occurring within a stock you trade or a sector is a great source of stocks to plug into the Diversified Trading System.  Allowing DTS to cleanly and beautifully capture the moves though any or all three DTS trading platforms.  Our goal remains to assist traders to make greater profits during all types of markets.  Sector and money rotation is another tool.


The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in the DJIA, YM (mini), S&P 500, ES (mini), RUT, TF (Russell 2000 mini), AAPL, AMZN, GOOG, NFLX, and LNKD, GS, and Tesla Motors (TSLA).    


Here is an updated list of the markets where I have found that DTS (all three birds) are producing numerous signals:

  • DJIA future (e-mini available) – Highly recommended
  • S&P-500 future (e-mini available) – highly recommended
  • Russell 2000 future (e-mini available) – highly recommended
  • NASDAQ 100 future (e-mini available) very highly recommended
  • US$/Euro futures (e-mini available) – very highly recommended
  • GS (Goldman Sachs) – good two way volume –
  • AAPL (Apple Computer) – very highly recommended
  • GOOG (Google) – very highly recommended
  • LNKD (LinkedIn) – solid intraday range
  • NFLX (Netflix) – solid intraday range
  • TSLA (Tesla Motors) – highly recommended  
  • 30-yr Treasury Bond future – did not get quiet – opposite took place
  • 10-yr Treasury Note future
  • TLT (Treasury Bond Long ETF)
  • TBT (Treasury Bond Short ETF)
  • Gold (futures and ETF – GLD)
  • Silver (futures and ETF – SLV)