What You Really Need To Know About The Stock Index Futures

Well, welcome back and happy Sunday everyone! Before we get started I want to go ahead and thank all the great people in the Pittsburg area that came out to see us yesterday. Some of them made great, great drives. In fact, we want to give a special announcement to Allen and Carol who drove for six hours to go ahead and be at yesterday’s special event, thank you and to Jim who is a Marine, it was great talking with you there and all of you that I got to spend a little bit of time with yesterday. It was very special to me, thank you very much!

Financial News And The Stock Index Futures

As we go ahead and look to next week, I want to focus on the concept of the news media and how it relates to what we’ve been doing here because this is something I often talk with you about and have talked to you about over the years. I want you to see this in action once again. If you recall, if you’ve been watching the last couple of months of my videos you know I’ve been very bearish on the Russell. The reason why I’ve been so bearish on the Russell is because for the first time in eighteen months we had a sell signal on my core trigger. What happened here, we had a higher high in price but we made a lower high in my core trigger. That’s a pretty big deal and so I said, this time when we pull back (we had these pull backs in the back drop here) I said this time when we pull back, I’m expecting a deeper correction, which we’ve gotten. Now, the interesting part about this though, and of course I kept talking about this and talking about this and talking about this, we’ve seen this in action, I’ve been doing a lot of short side trading in the Russell because of this. You didn’t hear a lot of it in the main stream media. In fact, a lot of people were really surprised. These two words kept resonating in my head when I showed this at a live public event that I did last Wednesday, ‘Holy Cow, Holy Cow’. These were the big two words that I heard when I showed this huge divergence in what was happening. So down here was the Russell, way up here was the DOW & the S&P. There’s all this window dressing, if you will, of everyone thinking everything was just fine. News media was focusing on the DOW & the S&P not on what was happening down here and it’s like ‘Look! This is going to be a huge moving correction back because this is unsustainable because normally these markets all track together. Sure enough by Thursday we started to go ahead and see that very correction that I was sharing with you. Now, the interesting part about this is, here was Thursday night’s discussions, we hadn’t been seeing this.

The thing with traditional news media is they’ve got a handpicked group of news sources they generally work with. Many of those news sources are very biased, they’re institutional based, and they may have positions on whatever the case may be. They don’t have as many independent but highly regarded sources like with what we do to go ahead and get their analysis from. A lot of time they’re kind of behind the curve in reporting things after the fact rather than being on the forefront like we were with this whole process as it was unfolding. That’s why it’s important to have additional resources at your disposal to get unbiased information away from traditional financial news media.

As we go ahead and look here you’ll see then Thursday night suddenly the ‘Russell 200 is in a Correction Territory Amid Broad Sell-off’. Gang, we saw this broad sell-off already unfolding for weeks and weeks and weeks. Then of course that Wednesday we showed that chart right before the big move. What I also find interesting is a couple other points here, wasn’t just myself that saw this a mile away. George Soros did as well. You’ll notice in the first quarter here was his most recent 13F filing that just came up here last week and you’ll notice that he too was very bearish on the Russell during this time. Institutionals are seeing these things that we’re seeing here but you’re not going to necessarily learn about them in broad news media. In fact, by the time you learn about them in broad news media it’s typically time to go ahead and potentially make a change. That’s how Friday was actually affected for us.

Taking A Look At How Friday Played Out

Friday we walked in the door with selling taking place at the open. Well, the problem was that we actually had an accumulation bar on Friday. Let me just show you a couple of neat things here. So, we had an accumulation bar on Friday, it was Thursday’s accumulation bar so we were selling into that accumulation bar… Now that we’re selling into that accumulation bar and we also had the mainstream news media very bearish. Now, I have a great deal of respect for Ralph Acampora but the news media is finally reporting that Ralph’s got this sick feeling about stocks and that the NASDAQ could fall 25%. What was also being said was ‘Russell 200: Small Caps Usually Suffer Intra-year Drops of 10%’, well then gang why didn’t we hear about that in the news media as the market was dropping almost 10%? Do you understand what I’m saying? We don’t hear about these things as retail traders until after the fact. That’s why you need some more institutional views like mine to look at on a nightly basis. We try to that even more so in the Premium Day Trading and Swing Trading Videos of course.

As we look at this now, here we were with this bearishness, in fact this video title is Total Bearishness because everything is negative. I kind of walked in the door, a lot of discussion about selling and selling futures lower. A lot of negativity walking in the door. ‘Seven Reasons Amazon Stock is Going Nowhere in 2014’, a lot of negative news out there in the morning. Here we are, we’ve been talking about this move for months and we’re getting the sell-off we’re getting the disparities where the DOW & the S&P are selling back off now. Now the mainstream media is going ahead and catching on to this whole process. That’s a bad time to then sit there and want to jump in short because by the time the mass media gets very bearish by the time they start pointing out all the reasons why these things happen that a lot of times can lead to reversals.

So when we walked into the door Friday morning and I had this accumulation bar from Thursday and that bearishness from the morning news reports I said look, I’m done. There was one spike at the open there that sold off and then after that and even that sold off there right into a key support level down below and that’s all she wrote. From there on it was straight up, so I said no, I’m not doing it, I’m not getting caught in this. This is a retail trader trap. What’s going to happen here is that they’re going to try and drive this up, this is exactly what we were talking about in the live trading room on Friday morning but a lot of people were still in that mindset because they’re reading the news. They were of that mindset that hey, this could be the day that it just keeps dropping. Well we’d all like to see that. What’s important to understand in the bigger picture is we’ve got another layer of support that you all need to be aware of. Let’s take a look at this.

Looking At The Other Layers

Here we are, this is a 7 month view of the Russell. Take a look at this gang. We broke that level way back in approximately October of last year, we came down to that level. Popped up for a minute, came back down to that level. Took off, pulled right back to that level, came up, pulled right back to that level. Came up, pulled right back to that level. Came up, pulled back to that level. Came up here we’re right back to that level as of Friday. Powerful, Powerful, Powerful stuff gang! While a lot of people are going and focusing on the mainstream news media and maybe the long term fundamentals, nobody’s looking at what’s really happening right before their eyes. It’s really great to see where the key support and resistance is from a technical perspective.

With all that being said, a lot of great stuff, a lot of great analysis that I’ve been sharing both in the room and even in these videos here with you. From my perspective as we go into next week now you just saw, we’re at that major 7 month support level. We also have numerous accumulation bars that make up that support going into the back drop like right here, right here, and right here. Over and over again, a lot of support in this in general all the way back through. We’ve got to get through that! Look at what happened with Friday’s activity to close out the week this is another really neat thing. We’ve had 5 weeks now where we’ve been caught and maintained between my key support and the key resistance. Five weeks we’ve been trapped in there! Now, hopefully all of you can imagine once we finally break down from that area or we break out from that area that could lead to some fantastic moves directionally speaking. But what you don’t want to do is you don’t want to be making wild bets on the stock index futures here at this point until this resolves itself to the upside or to the downside here.

A Quick Word About The $VIX

Personally, with the $VIX word is I would love to go ahead because this $VIX here is very low and that’s another thing we’ve been commenting on. That’s a very unusual place for the $VIX to be, if I take this out to a weekly basis there you’ll see this is some very low $VIX and typically what happens is the market spikes off those levels. Well guess what? If the market spikes off those low levels where is the stock market going to go? So $VIX spikes up, where’s the market going to go? The market is likely going to go down, have that great break. So I would love to see that as you can imagine. The market generally rides the elevator down and climbs the stairs up. So happy to go and see the elevator ride the kind of trade that could make your week, month or more very quickly.

That’s going to be kind of my key focus. What’s happening with the $ VIX is we’re sitting at these ultra-low levels. This level down here at 11 was where we were back in 2005 to 2007. If you go ahead and take a look right here, we’re back down into that area before the monstrosities of sell offs we had that started appearing even in 2006 there and 2007. We’ve obtained these levels before, it’s not common to get there and stay there very long so what I’d like to do is see this market start to push back up. We want to see the $VIX because then the stock market will be looking for that big drop through those key supports. That’s going to be a key focus going into next week and hopefully you’ve learned a little bit more today about why we want to have a liable source outside of the news media to go ahead and look at these markets in a much more accurate way than is usually being reported after the fact elsewhere.

You guys have a great rest of your Sunday. I’m looking forward to seeing each and every one of you in the Live Trading Room Monday morning or in Monday night’s videos here. Take care everyone!

Leave a comment!
Read previous post:
Rob’s Trading Strategies Proved To Be Valuable Again Today

Okay gang, Rob here with you. Boy, what a lot of fun! Thanks to all who joined us this morning...