Timing Market Turns - 04/18/2006

Posted at 0028 EST
Market Timing for Daily and Intraday Trading Options, Futures and ETF's on SPX, NDX, and DJIA.

Edited at 0358 - (Hi Yuri. Yes, that's fine. -:} )

Editing functions are still sticky. We are sure it is not our computer or our ISP.

We have many people responding to the email offer. To clarify, this is not a newsletter nor will you receive a solicitation from us. It is free and may never be used if we can solve this issue here or get the website operating. It is ONLY for scenarios like today when everything goes wrong at the worst of times for us and for all of you as readers here.

We will ignore the hotmails, gmails and yahoo mail addresses. Only emails from your Internet Service Provider (whomever you pay for internet access) will be entered into the list.

I am dismayed by the number of readers who indicated that they are still short in some way. I assume that our consistent urging to use stops is being ignored. If you didn't learn the lesson from today's spike, then you probably will be out of trading by the end of May 2006.

Asking where to place stops is asking us to violate U.S. laws and regulations. That is like asking what is the answer to number 5 on a public school test isn't it. We won't break the rules - ever.

Brutal Truths - THIS IS OPTION EXPIRATION WEEK - KNOWN AS THE MARKET'S TWILIGHT ZONE!

1. Do your homework, read a book like John Murphy's. Used ones cost less than shipping at Amazon! Invest in yourself! Trading is like war, guerilla war, nuclear war. You will die, be ruined, hurt those you love if you aren't prepared.

2. I have consistently warned about the aggressive swings with higher volatility ranges and sentiment changes that will prevail over the markets during the next few years. Today was a reasonable example of this. It will happen again and again.

3. Traders love days like today even if like me, they were short at the open. A daytrader would be out of the short by 0935 and likely buying before 1100, pyramiding by 1120 and taking profits by 1215, re-entering long between 1350 and 1400 when the market did not breakdown and out by 1520 for a plump 12 to 15 point day.

What is a trader's position now? Flat and ready for tomorrow's open. If you are long or short now and believe you can trade markets with just the blog ramblings of some old man like me, YOU ARE DEAD WRONG!

Today was an expensive lesson for a few readers. Books cost but a few quid and some enriching hours of reading and studying. Are loss prevention, risk management, money management foreign concepts? Can you explain them? Do you have a plan you can show me that is based on those principles? If not, then stop trying to trade. The trading locomotive will run you over and never slow down. Total ruin is your future reality. I can guarantee it.

If you think this rant is too harsh or mean or condescending, I will refer you to this and previous similar rants - and, then point to today's action asking you why you did what you did?

Nobody ever told me anything like that when I started trading decades ago. If you learn a trade or profession, isn't that learning program quite long? Why do people think trading is any different?

- - My apology to all who know how understated the above comments are. Traders, I hear your 'Amens'. You just don't see the questions I receive. "What is MOC? Where do I place my stop?" It makes me want to stop posting.

To the markets - SPX 1293 may hold as support on a downward reaction if 1301 breaks, and then Monday's lows will be at risk. Resistance is at SPX 1311. Above that level, for a close or for more than 2 hours, the scenario returns to the previous uptend.

If the blog functions tomorrow, I will post frequent updates.

Our Swing position - we will re-enter short position at the opening tomorrow with a tight stop.

Our Investor core position - we will remain in cash till SPX 1290 is breached again (which may be tomorrow).


What to look for tomorrow and Thursday, intraday:

1. A move to cover the gap at SPX 1286.

2. Lateral movement for most of the day with attempts to exceed yesterday's highs.

3. The Q's have resistance at 42.75 and support at 42.30

4. The Dow has resistance at 11310 and support at 11178.

5. The NDX has resistance at 1740 (weak) and support at 1705.

6. The SPX has resistance at 1311 and support at 1301.


Question asked by more than a few - "Am I sure that April 11th was a high?"

As of this moment, I believe so until proved wrong. A pulsive upward movement above SPX 1320-22 would be destructive to that belief. April 11th only applied to the S&P 500. It was early by at least one day. Momentum peaked on April 5th. As you know the Dow topped in March and the NDX topped in January.

If I told you that Thursday this week is a time locus point, what would you be preparing to do? What action (long, short or cash) would you choose? If you don't know a strategy for that information then you should not be trading, should you?

Trading isn't about timing. Timing is about trading. Trading is alot of things, but mostly about you.

Good Trading and God bless you

W. B. Busin