Rob’s Strategies For Post Yellen Speech, Pre FOMC

Welcome back gang. Well we have more information and all it does is support everything I told you last week. The big deal if you recall from last week was this, over and over again. I knew the NASDQ looked bad for lack of better word, the DOW looked bad for lack of better word, and the S&P looked bad for lack of better word. However we went ahead and the RUSSEL never did look bad. The closest we came to that was on Thursday we briefly dipped below the speed lines only to be rejected back to the upside. What this all falls back to is the strategy I gave you all last week worked phenomenally. If you went ahead and were too quick to short this market you got your head handed to you and watched this market pushed back the opposite way. It all came back to the RUSSEL, people often say, why is the RUSSEL on of the things you like to trade? As we go ahead and compare the S&P, the DOW, and the NASDQ how they were all basically going the wrong direction for lack of better word.

What is the right direction? Well what I found in the last 4 years is, often what is going on with the RUSSEL tends to be a more accurate indication what we should really be focusing on. And last week was another fantastic example of that in action. We held the speed lines, we showed strength, even today with the rallies that we have at hand. The S&P is with a few minutes left or so, the S&P is up a little over half a percent, the DOW is up about a little less than 3 quarters of a percent, whereas the RUSSEL is up 1 and a quarter percent, it has continued to show its strengths over and over again. That is why it has been the trade of choice, both as an indicator what way not to go, and as an indicator as to which way to go. Going into the days to come, as long as all 4 of the stock index futures go ahead, and this doesn’t matter is this is stock indices, if you don’t trade futures that’s fine, many of my students trade ETF’s or equities or options, doesn’t matter what you like to trade use your favorite instrument. Doesn’t matter what index you are looking at or what instrument you want to trade, what is important here though is that we continue to look for longs, as long as all four of the stock index futures stay above the speed lines here. That has continued to work, when three of them dip below but the RUSSEL doesn’t go along with it, stay in with the long side has proven to be the right strategy.

One other thing that I want to point out about the Bonds, cause I am getting a lot of people getting itchy fingers after I got my first buy side indications on an intraday basis in the bonds last week. Over all I am not a big fan of the bonds right now and I will show you why, but I had a couple of days that gave some great buy signals and people got all excited and where like wow they actually giving some buy signals on the bond. However those were meant to be intraday trading opportunities, phenomenal intraday opportunities but intraday none the less. In the bigger picture, here is what I need you guys to see, notice this inventory retracement bar over here, inventory retracement bar here, and inventory retracement bar here. Well as I go ahead and any of you that know my work, I speak to retail and institutional clients alike about this and has been written about in 5 different international languages where I was featured with this, and what happens is you will notice this is one big fat resistance level. Notice that right were that inventory retracement bar starts, is where we found resistance just here going into today. By the way, this is another point, I tell you that often what happens going into Friday on the bonds, gets reversed on Monday. Today that strategy held true as well. Now you will notice here, what about this on? It came up into this a little bit, well that is true, the whole range is one big fat resistance. Let’s actually take a look right over here if we draw that across we actually see the base of that inventory retracement bar is where we actually found resistance there. If we put this across now you actually see multiple layers of resistance. But wait, the thing that kicked off all this resistance in February, March, April, May and June here now is this inventory retracement bar. What you see is a massive number of resistance levels right above us that is why I told people “Hey from my perspective you want to be out of those trades by Friday.” The likely hood of blindly breaking through all of these, was very slim to none especially since we had a hockey stick sell going into Friday as well and a Hoffman fade stochastic spike situation.

Lots of sell signals on Friday that followed through today, and we got lots of resistance above us. If you want to look at this in a cleaner way, let’s take a look on a weekly chart basis, you can see that we have these distribution bars right there and right through here, you still got major resistance, slightly smaller of them to look but you have the same information. Lots of resistance right above us that is going to have to be negotiated, for those of you that are getting itchy on the bonds you will want to wait just a little bit longer before getting into anything other than day trades. That’s a couple key things I want you guys to focus on. You guys have a fantastic night, let’s go ahead and have some more fun with these stock indices tomorrow. We will look forward to seeing you then.

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