February 7, 2013

Logical Market Update | Where Did the Sellers Go? Just Another day in Chop City!

Where Did the Sellers Go? Just Another day in Chop City!

Thursday began exactly as expected. The broader indexes headed lower and appeared to be on the way to taking the bulls to the woodshed. But as is so often the case once some of the “smoke” cleared and it appeared that most of the selling was attributable to “day” traders the covering began. The pace wasn’t as quick as we have seen over the past few sessions, but nonetheless by the close the fearless were running for the exits and the market basically closed unchanged.

Notable:

US$/Euro dropped or rather slid below 1.34 on Thursday. I felt strongly that this contributed to the initial selling within the precious metals and equity markets, but when prices stabilized at the 1.34 level everyone lost interest. More importantly, the decline off of the 1.3715 high is exactly what I was looking for. The pattern in progress may be nearly complete and the support zone (1.3320 to 1.3250 just below current levels may contain the balance of downside expected. This zone needs to hold if the near term picture is to include another attempt at 1.40.

Diversified Trading System:

For those familiar with the Diversified Trading System hopefully you are using the Hawk Micro Scalper to trade the many opportunities that have been given in the US$/Euro over the past few weeks. The Hawk is devised particularly to find scalp trading signals and the incredible trades it has produced are more than I can list.

Here is a small description on how it works: it is essentially a red light/green light system. What you are looking for is as follows: when you get the beginnings of a scalp signal you get this little warning dot, and when the scalp signal completes you get a triangle and a hash mark on your charts, which is a suggested entry point. So to reiterate, whenever you see one of these triangle and hash marks, this means you have a complete scalp signal. The arrow you see on your chart simply indicates which bar is your entry bar. For additional information on this incredible system, visit scalp trading system.

Here is a brief list of the markets I have found DTS to very profitable:

• US$/Euro
• GS (Goldman Sachs)
• AAPL (Apple Computer)
• E-mini S&P 500
• GLD (Gold ETF)
• SLV (Silver ETF)
• TLT (Treasury Bond Long ETF)
• TBT (Treasury Bond Short ETF)

Within the coming weeks I’ll be providing more details and suggestions on trading both equities and options using DTS trading signals.

Expectations for Friday (2/8/2013)

The overbought nature remains intact, with the only market reversing that trend and moving towards oversold being the US$/Euro. Friday is an options expiration (weekly) so there may be some “pinning” amongst the larger issues (GS, AAPL, GOOG, S&P). LinkedIn may provide some excitement as the stock ran to the top of its expected range after releasing 4th quarter earnings.

Intraday Support and resistance zones (daily) to watch for:

DJIA: support at 13,800 and resistance at 13,965 to 14,150
SPX: support at 1500, 1495 and resistance at 1515 to 1525

Treasuries:

30yr – support at 142’16 to 141’16 and resistance at 143’29 to 144’12
10yr – support at 131’14 to 131’06 and resistance at 131’22 to 131’26

TLT – support at 116.50, 116.00, 115.50 and resistance at 117.15, 117.85, and 118.20
TBT – support at 67, 66. 55 and resistance at 68.10, 68.70, 69.15

Stocks:

AAPL: support at 452, 440 – 439 and resistance at 469, 481
GS: support at 146 to 143 and resistance at 151 to 152

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