Friday, August 06, 2010

Emini Futures Trading / Interview with Michael X


Today's Broadcast

Be assured from the first day we heard of you, we haven't stopped praying for you, asking God to give you wise minds and spirits attuned to his will, and so acquire a thorough understanding of the ways in which God works. We pray that you'll live well for the Master, making him proud of you as you work hard in his orchard. As you learn more and more how God works, you will learn how to do your work. We pray that you'll have the strength to stick it out over the long haul—not the grim strength of gritting your teeth but the glory-strength God gives. It is strength that endures the unendurable and spills over into joy, thanking the Father who makes us strong to take part in everything bright and beautiful that he has for us.
Colossians 1 9-12 The Message

Live Chart Update
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Live Chat Update
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Ever Heard of the XII?
Neither had we. It stands for the Institutional Index. As we were quietly enjoying our swag copy of Futures Magazine this weekend a man whom we also were not previously familiar with opened our eyes to a thing or two about a thing or two. We offer the following excerpt for your consideration...

The Institutional Index (XII)  is a capitalization-weighted index of 75 stocks most widely held as equity investments among institutional portfolios. Clearly, it is the institutions that dominate the markets, so it is important to know what they are doing. Garret Jones believes the XII is a more honest representation of reality. For example, the chart below shows the long-term market top was in 2000. The financial news media and the industry at large believes the top was in 2007. It is interesting to note that XII made a perfect 61.8% Fibonacci retracement at the 2007 high.

The XII chart provides valuable information. We are in a 10-year-old secular bear market. A confirmation of that is the 2009 low was lower than the 2002 low; 2002 was the first time a prior major low was broken since 1932. This lets us know that we are now entering the period where “the second shoe will drop.” This is confirmed by the Elliott Wave count that implies we are approaching the nuts and bolts phase of the bear market where everyone is aware that we are in a bear market. That realization changes sentiment which, on balance, has been very bullish for a long time. That change in sentiment brings on an overwhelming bearishness that feeds those final stages previously mentioned with the psychology necessary to ultimately bring about capitulation.

Simply put, we are at the most dangerous period of the cycle in the past 80 years. The winner at this stage of the cycle is the person who can successfully protect his portfolio. However, the "safe money" investments of earlier stages of the cycle are not likely to be the "safe money" investments of this stage. Money market funds, for example, may be much riskier than in the past.

In analysis of the S&P 500, we expect a C wave rally off of the early July lows, potentially testing the mid-June high, so that by the time you see this the major indexes likely will be at a higher value to short. As noted above, they could potentially test the April 26 top, but beware of August as that is our major turning point. (read the complete article)

Weekly Trading Zones / Week In Review
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The Non-Farm Payroll report rolled in weaker than expected Friday morning and we finally saw a breach of the 1115/1116 WTZ which had served as support for the entire week. Not only were the numbers bad, the numbers from last month were revised downward. So now we have bad on top of "can we trust the numbers at all"... well can we? Oh, did I mention a member of the Economic Dream Team abruptly resigned just hours before the numbers were released? Anyway, once the numbers were out it came as no surprise that the market sold off. Here's what was surprising -  After the market found support near the 1107.5/1108.5 WTZ, we rallied up, to, and through, the 1115/1116. Now that's quite a feat! Until you look at the volume. In fact let's not just look at Friday's volume, let's look at the last 5 weeks.

Rising Prices / Declining Volume

S&P 500 Emini Futures / ES

DOW Emini Futures / YM

Pray Hard & Trade Safe!

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