March 25, 2013

Logical Market Update: Day Trading Opportunities Strong as Euro Tumbles, Equity Indexes Stumble and Momentum Crumbles

Day Trading Opportunities Available as Euro Tumbles, Equity Indexes Stumble and Momentum Crumbles.

The broader indexes have spent the seven sessions in range bound trading without making much headway in either direction. The pattern is corrective and suggests that additional upside complete with additional new highs in the DJIA, S&P 500, and Russell 2000 expected.

The Euro continues to stumble and fall against the US dollar as the ECB seemingly attempts to calm and contain the situation in Cyprus. This has been the star market lately for day trading supplying multiple opportunities in both directions.

The Treasury markets continue to see what I call “the knee jerk” reaction to the movements in the equity markets. In other words if the broader indexes move lower the treasuries tick higher and vice versa. So here as well some trading opportunities are available.

The patterns in progress suggest additional downside before the larger advances pick up again. But I’m not looking for anything beyond high level support to contain the selling.

As I have stated previously it is the corrective periods where momentum (upward or downward) gathers and clears the board for the larger advance to pick up again in earnest.

Traders should remain in play as trading opportunities on an intraday and short-term basis will continue. Diversified Trading Systems (DTS) via its three (Hawk scalper, Falcon swing, and Eagle trend) systems remains my choice to use as it offers a complete and unique system to trade with.

Observations and Notes from Monday’s trade:

The Russell 2000 was a good index to watch for direction on Monday and I believe it will continue to offer signals intraday. Trade has been held in a range between 953 and 932, with some strong intraday swings. As long as the range remains between 6 to 10 points I’ve added the Russell 2000 June future to the Eagle Trend for trade signals.

The DJIA (basis the June future) has also been in a very tradable range swinging over 100 points from high to low. Here as well I’ve added the June Dow future to both the Falcon swing and Eagle trend for trade signals.

The S&P 500 as well deserves to be given some space and I’ve added the June future to all three birds for signals.

As for trading opportunities, the important factor remains to follow the trend and not your emotions. Remember position sizing is critical as is risk management both of which are covered well with Trade Manager from Diversified Trading Systems. Also a point to consider is that the DJIA and S&P 500 both offer e-mini contracts for trading.

Here is an updated list of the markets that DTS (all three birds) are producing numerous signals and have been very profitable:

US$/Euro
GS (Goldman Sachs)
AAPL (Apple Computer)
GOOG (Google)
LNKD (LinkedIn)
NFLX (Netflix)
E-mini S&P 500
E-mini DJIA
TLT (Treasury Bond Long ETF)
TBT (Treasury Bond Short ETF)

Expectations for Tuesday:

Support and Resistance:

DJIA (basis the June Dow future): Support at 14293, 14221, and 14163. Resistance at the 14525 level for starters and then 14600.

SPX (basis June future): Support at 1539.25, 1531, 50, and 1525.25. Resistance at 1560 with a break with follow through pushing stronger resistance to the 1565 to 1570 area.

Russell 2000 (basis the June future): Support at 936, 932, 928.60, 921.70, and 916.10. Resistance remains at 950 to 952 and then 960 to 965.

Treasuries:

The treasury markets continue to recover. Monday’s highs for the 30-yr bond (basis the June future) poked just above short term resistance at 143’30 and while there may be follow through upside yet to come I suspect that resistance at 144 to 144’22 will contain it. Support has risen to 142’16 to 142’05 and then 141’16.

10yr –note (basis the June future) also poked just above resistance at 131’16. Additional upside may to be in the cards but additional resistance at 132’05 should cap it. The next down leg may only slow and pay tribute to support at 131’05 to130’25, with stronger support below at 130.

TLT – Resistance at 117.75 to 118.00. Support at 117, 116.50 and then 116.

TBT – Resistance at 67.50 – 68 with support at 65.85 and 65.50

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