Here’s A Nice Follow-up By Rob To Last Night’s Videos

Okay gang, welcome back.  Well tonight’s video is going to be an add on to last night’s video because everything we talked about in last night’s video was a focal point in this morning’s session.  We talked a lot about the $VIX and also the stochastics being overdone on the stock index futures.  But at the same time the $VIX had room to grow to the downside still as you recall we popped up the various charts like the monthly chart here and showed what these levels used to look like and how low the $VIX can actually go before major reversals take place.  So for all the doubting Thomas out there that say the market can’t possibly go any higher, we’ve been trying to show that that’s actually not true.  The market has the ability to go higher based on historical precedence here with the $VIX.  So as we get into this morning’s session then you recall the strategy.  I said, look, today the market is supposed to go down because of the fact we have these very over bought conditions.

That’s exactly what we did first this morning isn’t it?  First thing we did was open up and traded slightly down.  But what I told you was we were going to be very cautious about any short side trades because of the fact the $VIX said look we can continue higher not to mention the stock index futures themselves, we had two stock index futures that only traded sideways when the other two were taking fairly decent haircuts here.  What that means is if these other two go ahead and start to push the upside the whole thing can start picking up some steam there.  Well we did go ahead and with all that being said take a look now at where we closed gang it’s really exciting and interesting and sets us up for some great trading ahead, especially with all the great economic data that we have coming out tomorrow morning for instance. Basically between tomorrow and Friday we have lots of economic data to make the world go round.  As we close up today you’ll notice that a couple of the key instruments for instance the S&P and the DOW, we went ahead and we stopped cold at our previous distribution bars, everybody see that?  We’re right up there and that stopped us, so there was still inventory, the same inventory that stopped us before and then pushed us down is the same inventory that stalled us out today.  We’re going ahead and as we get into tomorrow you’ll notice that we’ve got resistance in the NASDAQ and the Russell, a lot of resistance that was in the back you see a lot of trading that was done in this area over the last couple of months so this is pretty exciting.  As you can imagine the big story for tomorrow is can we break back above these distribution bars and get the NASDAQ and the Russell pushing up as well so that’s key.  We don’t want to see going into tomorrow the DOW and the S&P pushing and the other two stalling out in this congestive area.  Again the good news is we have a lot of economic data coming out from the US and European markets tomorrow morning.  That should make for some very interesting trading.  As a reminder, we stuck to that strategy I shared with you this morning in the live trading room, when the market went down initially we weren’t going to have anything with it because it didn’t tick and tie with what we’ve been seeing here in these stock index futures.  Sure enough the whole thing came back quite violently this morning and really chopped up a lot of traders that weren’t willing to wait.  Pretty much the market spiked down, spiked up, spiked down, spiked up oh and by the way spiked down, spiked up, and spiked down, spiked up some more! So it looked pretty ugly this morning. Here is a live example of what that looked like this morning, the market went ahead and opened down initially to make sure that they got people nicely stuck in there, popped right back up, violently pushed back down, popped back up, violently pushed back down, popped back up over and over again throughout the morning here.  We saw this over and over, the beauty was we weren’t caught in the middle of it because we said we weren’t going to focus on the shorts, we were going to be very cautious about shorts going into this morning if you listened to yesterday’s video.

In the end, going into tomorrow we’ve got a plan and lot of economic data so we’re going to see if that data can help push us.  Particularly important here will be the bench marks on these distribution bars right here.  Again we stopped in those ranges today so there’s still inventory that people are either selling, taking fresh short positions or selling from their longs down below or selling short.  There is still inventory up there, we need to break through that inventory and we want these other two stock index futures to go along with it and then we’ll be looking at taking some pretty aggressive long side trading there.

We’ve got a great plan going into tomorrow morning, keep an eye on that as we go ahead and take a look at other instruments to know. The Euro, we’ve got very important economic data coming out on the Euro tomorrow morning and we’re still stuck though, even today, at the dollar 30 10, dollar 38 20 area that I told you about.  In fact as you see we got stuck at that level today, that’s why I said it was going to be so important to break that 80-20 rule of mine going into today’s session, we did not do that.  Now we’ll have to wait to see if tomorrow’s economic data will help us push through there.  Just beware that when that economic data comes out at 8:30 and then the follow up speech at 10 o’clock that those could cause temporary pops in that area before it goes ahead and retraces back down.  Be very mindful not to be caught in that around the news.  As we go ahead and we take a look here in Gold it had a small retracement rally back into falling resistance here.  We’ll look to see if it can roll right back over and trade below the last two day’s lows and look for fresh shorts.  We didn’t do any of those today, we were kind of overcooked to the downside here, so we’re going to hold off for further opportunities there.

Okay, let’s take a look at Crude Oil this evening. Crude Oil has some work to do here.  If we do get below the 98-80 area I’ll be looking to see if we take some shorts.  So far we held that 9880 area that was an important level, we had pivot point resistance, we had long term daily there and of course my 80-20 rule, and we just couldn’t break through that 80 level this morning.  But that made accumulation bar today so we can break through that 9880 tomorrow, I’ll be seriously looking at short side opportunities.  Stock index futures, we went ahead and we talked about and the bond continues to go ahead and fulfill that pattern I’ve been telling you guys about the last several weeks.  We push up and then what we do is we fail to hold that support line and take off of it, that would be a buy-signal but unfortunately we come back to the line and just drop like a stone through it, come back and drop like a stone, come back and drop like a stone, come back and drop like a stone.  That’s why I’ve been warning you about that over and over not to be looking for fresh long side Bond plays in the short term until we can get above pull back and start to take off again you know, from my perspective.

Great stuff here, you guys have a fantastic evening! I will look forward to seeing each and every one of you in the live trading room tomorrow morning or in tomorrow night’s videos here.  Take care, have a great evening.

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