Rob’s Strategies Played Out Well Friday! Is Now The Time For A Pause?

Welcome back everyone! We are going to recap from Thursday night’s video to what we were looking for on Friday. It was all about the whole concept of the three to one rule. Typically what we are looking to do is if three instruments are moving in one direction and one instrument is not playing ball we are looking to see if that one plays ball or start to digress in the opposite direction.

With Thursday night we saw that, unlike the other three instruments (S&P, DOW, and NASDAQ) which all closed above their speed lines, the Russell had not closed back above the speed lines as of Thursday night. Going into Friday the whole key was to see if we could, in fact, get the Russell going back above those speed lines. If the answer was yes we were going to be focusing on long side trades this morning. That is exactly what happened. That led to decent trading this morning by getting the Russell pushing on. That first thirty minute opening range was a real nice trading range here this morning.

As we go into Monday now, the thing is that we are more or less overbought here as you can see (on my charts at 1:26) in the short term. What technically should happen the next day after a move like we’ve had in the last couple of days is the market should take a pause off of here. The exception to that rule would be a continuation to the upside. Typically, there’s at least an 80%+ chance if not higher, that this should take a pause. The surprise would be a continuation move to the upside.

The way I’m going to play it is that I’m going to be expecting a retracement on Monday morning. I will be watching just to see if that retracement starts to wane and all of a sudden we start pushing aggressively again to the upside. The Russell still has some decent room to grown here. The NASDAQ has quite a bit as well (marked on my chart at 2:10). The NASDAQ being the strongest of the bunch. The S&P and the DOW have some decent resistance still right above us here which is much closer than even the Russell. With that being said, as we’re going into Monday, I’m going to be a little slow walking in the door. I’ll be cautious and looking to see which way the market is pushing. I’ll be very non-judgmental walking in the door. We had a much more concrete plan going into Friday morning. If we started trading above the speed lines we were going to be looking for longs but because of the fact that we are officially due for some retracements we are due for a pause. I’m basing that on these levels we are sitting at here on the stochastics in relation to what we have with resistance above us and how we moved in the short time that we did move. That is the expectation.

Key Levels In Gold And Crude Oil

What I really am going to be focusing on, outside of the stock index futures, come Monday is going to be a couple of things. Number one is gold. Interesting to note, while the market went up today so did gold. We are continuing to watch this very very important level. This level I cannot emphasize its importance enough. In fact, if we take a look on an intraday basis it is important for you to see that. This is what’s happened multiple times now when we’ve gotten up to that key resistance level that I’ve identified (on my screen at 3:48). You’ll notice that its gotten killed off and hard only to go ahead and have it retest those levels. This is a huge huge battle that is taking place right now between the buyers and the sellers. Right now, every time the buyers whip it up there real quick on a 100 point spike but then they will drive it right back down violently only to watch it get right back up there. Meanwhile, the stock market is going up as well. Usually those are strange bedfellows. You expect gold to go up when there is a risk and a worry in the market and you expect gold to go down when the stock market is rising. Here today they both rose together. This is one of the other reasons that I’m waiting so patiently going into Monday for more information. Can we break this key area that we are looking at on gold? That area that I’m watching very closely is right around the 12720 area.

As far as crude oil, this is another great one. We’ve talked at length about this whole concept with the 9500 to the 9750 and then above 9820 looking for the moves to 10000. That is where we wound up again today as you can see. Just like gold we are testing and retesting those resistance levels to have a hard push. That is what crude oils has been doing here at the 9820 level. With this being said, now what should happen come Monday is that we should take a breather here. It was a pretty good run for one day and we are kind of overbought here down below (on my charts at 5:33). In fact, it would be healthier if it would pause to refresh and then push through. A lot of these are showing mixed signals so I am going to be watching very carefully if we can actually break through this 10000 level, pull back towards it and start to take back off again. I will be more than happy to look for long side trades in that situation.

Those are a couple of the key ones that I wanted to look at. Again, the stock index futures we are going to take more of a wait and see going into Monday. Today, like I said, good money was made here into the US opening range. The first thirty minutes of the day. Now we are going to see if we are going to get follow-through which would be the surprise or if we are going to get a little bit of a pullback. If the trends looks good enough on an intraday basis then I’ll actually take advantage of that and look to short. It if it falling back into rising trends then we will probably back off.

Keeping An Eye On The Bonds For Swing Trading

One other thing that I wanted to talk about here tonight. Bonds. People were asking me because the swing trading on the bonds worked out so well. People were asking what is next with that. From my perspective we still have the down trending 200 day moving average resistance here. I think it is a hold off at this point. Let’s wait to see if we let it go into next week what will happen is that every day that goes by and this gets lower and lower it makes it a lot easier for it to push through here (on my charts at 7:03). Then we have a much better range to work with. We still have some underlying structure that could allow us to push back to the upside but until we get back above those speed lines and really that 200 day moving average it is proving to be key resistance. That was one of the reason why I said as we approached that level that you are going to want to trail up that trade. I was very adamant about that in the Live Trading Room and even here in the free nightly video. You don’t want a good swing trade to lose air and come right back down. Then you’ve turned a great trade into a loser.

Right now I think it is a wait and see on this one going into Monday. If we can get back above that 200 day moving average over the next several day then I will certainly be aggressively looking for long side swing trades.

You guys have a great weekend!

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