Waiting Patiently For Monday’s Stock Market Open Paid Off! Let’s Review Why

Welcome back! Rob here with you, of course. Welcome to a new week and what a great way to start the week here.

Before we get going I’ve had a couple of emails saying that I haven’t talked about the BONDS and if I can look at them. Just to hit that really quick, the reason why I haven’t been talking about the BONDS is because we’ve continued to fail to breakout. I recall that I was watching for a breakout here (on my charts at 0:38). My target was there (also marked on my charts) and that was achieved. After that point we had no follow through on an attempted breakout over here which we came back underneath. Since that point we just can’t get a good solid break. We have too much resistance here. We’ve been caught in between a rock and a hard place. I don’t really see any clear trend in that at this point so we are kind of avoiding that. That is why I haven’t taken a look at the BONDS recently but thanks for the questions!

The EURO going into this overnight session has some distribution that we have to focus on from last Thursday. All things being equal, I’m going to be focusing on breaking out above that distribution bar (on my screen at 1:21) and even if stay above this 13920 area into the overnight session if I start to see some buying opportunities there I might start taking some short term buys (albeit smaller size in the overnight session) especially before we break that distribution.

As far as GOLD is concerned I would actually prefer to see it break down below 13600 to look for continuations back to around the 13430 area. Right now that is what I am going to be looking at going into tomorrow. If it holds here and starts to bounce up I am probably going to stay away from it. We’ve got this negative divergence taking place here (on my charts at 2:02) with my fast trigger versus the rising prices. A lot of times we see that when we get that negative divergence against my fast trigger the market ends up coming right back off. I’d prefer to see that short side opportunity there.

In CRUDE OIL it came right down and touched my key support today. We were watching it like a hawk looking for a breakdown and it just couldn’t breakdown and held there. We will see if it can breakdown through that tomorrow. If we can, that might send us into a spiral down to the 9500 level. I would certainly welcome that trade going into tomorrow’s session.

The stock index futures is where the action really was for me today. We focused on long side trading actually in the Live Trading Room this morning and that worked out. It was profitable. The reason why we did that was, if you recall, the plan going into today was to wait and see. This is what I was afraid of: too many people got very bearish and very pessimistic. I remember Friday morning there was news breaking on CNN constantly and everything else that was taking place. Everybody was constantly telling me “so and so said this..” and everyone was in a panic. That led to a lot of shorting going into the weekend because people were betting that we were opening up Monday morning way down below. Much to their dismay we not only ended up above but we basically started driving up hard. In fact, the RUSSELL got back above its speed lines here and that is when we were focusing on the long side trades. When the RUSSELL never fell (I commented on that to you in the weekend video) and I told you that something was terribly wrong when you’ve got the RUSSELL holding up so well and then the other three are down. You remember my whole three to one concept so I was looking for the other three to come to the one. That is why I focused on long side trading here in the RUSSELL this morning given the fact that it was so powerful.

You’ll notice, I’d like to point out, that we went ahead on the S&P, DOW, and NASDAQ and stopped cold at my speed lines here (on my charts at 4:22). Then we got through the speed lines on the daily chart and ultimately closed right at the speed lines there on the RUSSELL. Gang, this whole compliment of tools that I use in my trading is so important each and every day to my trading work in the Live Trading Room, my championships, and everything we do. You can see that this continues to work and it is very impressive how we always have these types of things play out.

What We Are Looking At For Tomorrow

Going into tomorrow we are holding just under the speed lines on a couple of these stock index futures. What I am going to be looking at going into tomorrow is to see if we can have another resurgence back to the upside here. The short covering rally held up fairly well. The RUSSELL came down and that put us in proximity of the speed lines just like the other three now. So, can we actually have a repeat of this morning where it basically takes back off again? That could go ahead and prove to be very bullish. There is a lot of pessimism out there right now. There are a lot of people that are quick to get short. When they get short and they are put under this kind of pressure they start covering very fast, just like you saw out of the gate this morning. All of those people that got caught short over the weekend and how they just pile drived into this thing to the upside. That’s one of the reasons we were focusing on long side trades today in the stock index futures.

What I want to go ahead and do is look for that. We are going to be watching those key levels on each of the stock index futures going into tomorrow. It is pretty much that simple. We are right near the speed lines as we go into the close here so, do we open up above them and start to push up? Or do we hold below them and start to sell off? That is going to determine whether I am looking for long side trades or short side trades into the morning.

Don’t forget that we’ve got the EURO, GOLD, and CRUDE OIL as some good options that we are going to be watching as well going into the morning.

Great stuff. Looking forward to seeing what tomorrow brings after the excitement this morning and the way we are poised to go into tomorrow with the four different instruments that I covered. You guys have a wonderful night and we’ll see you tomorrow morning in the Live Trading Room or in tomorrow night’s videos. Take care everyone.

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