A Great Start To February Trading!

Hey gang, welcome back. What a great Monday. There were lots of trades in the Live Trading Room this morning and lots of great stuff all the way around.

Let’s start off first tonight with updates to the videos from late last week on things that didn’t quite fire off yet. They didn’t give the moves up or key moves down to those breakout points that we are always looking for. Let’s start off with AAPL. Going into tomorrow I am going to be all over it again. It pushed up initially this morning but I normally go ahead and avoid the first pushes up or down since they are often rejected. I’ve given you the strategies here on how I like to look for the pushes, pullbacks and then resumptions. We didn’t get that pullback and a resumption we go a pullback and a roll right back in. So we avoided AAPL today.

As far as the EURO it held that 13480 area (the 80/20 rule). It dipped its toe down there for just a few moments and then immediately got right back up above there and stayed there for the rest of the day. We will be looking still to see if that will ultimately fire off down below that 13480 area. Once again, we are looking for it to push down, pull back up and then push back down again.

Now looking at crude it has yet to break above or below key areas that we are looking for. Ultimately, I would like to get this thing back above the 9820 or down below 9500 with potentially small intermittent plays at this area here (on my charts at 1:47) below 9600.

Gold originally failed to break above the key areas I was looking for several days ago which would have been a much better trade. Initially, we had this day over here where it pushed above (on my charts at 2:03) and again, same thing, I looked for that pullback and that resumption. We never did get the pullback and resumption there as well. We just got a pullback. We never got the tradeoff there and kept looking day after day for the breakthrough. It just couldn’t do it. So, I started looking to break down below this key area over here. That is what I love about using these key support and resistance levels. If we break down, great, I get a trade. If we break out, great, I get a trade. If we don’t do either I get to move onto the next trade. That is such a liberating strategy. It is a great opportunity for a lot of you to unwind a little bit and have a little bit more peace in your trading just by waiting for key areas to break out or break down.

Looking back at gold we are still looking at those key areas that we were before. That is, backup above here or down below here (on my charts at 2:56). There are still a lot of great opportunities in regards to these key areas. Some of those key areas are above the 12720 area down below the 12350 area or more meaningfully, below the 12210-12220 area. Those are a couple of those key areas to let you in on.

Let’s talk about the 30 year bond as it did go ahead and break above as we were looking for. It did pull back and it did take off. It did that Friday morning and that happened live in the Live Trading Room. Students were following through with that and so that really had a nice continuation today. We mentioned the other day that if we could get above this line over here (on my charts at 4:00) that we’d really be focusing on looking for the thrust, pullback, thrust. It did take off there and had a nice continuation. Now it is a matter of trailing up the stop because we are hitting this long term resistance here. That’s going to be a bit of an issue. Plus, that is tying with key support that we are hitting on the stock index futures. We want to watch to see if this pulls back a little bit here and then it would be great to see this actually push up to here (on my charts at 4:30).

We want to make sure that the pullback is not too deep to give back all those profits from the entry. It’s great when they run and run but sometimes they run and sometimes they come back. That is why we have to make sure that we trail up those trades so we don’t give back too much of that money.

The Stock Index Futures Is Where The Action Was At Today

As far as the stock index futures, well, what can we say? That is where all the action was this morning. I walked in and the first 45 minutes we already had three trades in the Live Trading Room this morning. Just boom, boom, boom, great stuff. You just can’t ask for better. It was a really nice way to start the day.

As we look at this now. We have what I call a KOBO (kick off blow off) situation. We had the big wide range over here (on my charts at 5:18) followed by several smaller bars of chop and then a big wide range again. This is the kick off bar (on my charts at 5:22) and then you get the pause and then you get the blow off. Typically after that takes place you are looking for a reversal. That would tick and tie with what we really see here. We’ve got a lot of key support areas, as you can see, on these charts. The S&P, the Russell and the NASDAQ are all at key support levels. The Dow actually closed below its last major support level here with one bar. We expected that would try and retest this area going into tomorrow as well.

Looking At the KOBO In The Stock Index Futures

Normally, what should happen statistically speaking on most days is after this kind of move, the KOBOs, we should get a push back up. For the time being, as I’ve said, until we get back above those speed lines I’m really just looking for these opportunities as short side opportunities. That has worked extremely well and made for an awesome January. As we are going into February it was a great first day of the month. I expect that 2014 is going to be fantastic and so far it has been the gift that keeps on giving.

Going into tomorrow that is going to be the plan. We are going to watch first for retracement. I am watching for the surprise as well. This market has had a few surprises along the way and the surprise would be a continuation move to the downside. It would not be expected, of course, that would by why it would be a surprise. There’s a 10-15% chance that the market could go and keep on going. I would prefer if it is going to do that we actually open up a little bit and then start to sell off real hard again. So, somewhat similar to today where we had a little bit of an up move first before they started to go back down in a few of the indices. Overall I’m looking for retracements again going into tomorrow morning’s session.

M-Pattern In The VIX And What That Means For Tomorrow

Also, we have hit my initial objectives that I had for the VIX. If you recall, what I’ve been talking about and calling for was a retracement back to these previous levels right here (on my charts at 7:43). The VIX did hit that as well. It actually made an M-pattern today. Typically, after an M-pattern, the next day is going to be back to the downside here. You can see variations of the M-pattern over here (on my charts at 7:57) in previous history. Typically what you are looking for is the VIX to move down the next day which means the market will be going up.

Those are going to be a couple of things that we are looking at going into tomorrow. I’m expecting a lot of great trading and a lot of things are working out very well. This is both with the live trading itself as well as with the analysis. We are going to keep it coming.

You guys have a great night. Let’s enjoy this ride the market is giving us and make it a great 2014. We’ll see you all in the Live Trading Room tomorrow morning or in tomorrow night’s videos. Take care everyone.

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