Friday Free-Fall – Stop The Markets, We Want To Get Off!

Good golly, what a mess!  

The Dow gave up another 1,000 points yesterday and President Trump is now presiding over the worst week in stock market history. Was it because he blew up the budget? Was it because he got rid of Janet Yellen? Was it because he's likely to be indicted and impeached? Was it just because he was caught cheating on his wife with a porn star and then bribing her to cover it up using campaign donations? Who can say – so many scandals, so little time.  

What is clear is that the US looks a little scary to investors, both foreign and domestic and it's not the kind of thing that can be fixed by having a huge military parade so money is coming out of funds and those funds are forced to sell their assets at whatever price and down we go.  

As noted during the week, we're in a bot-selling pullback and it's following the script of our 5% Rule to the letter but that's not good news as the S&P finished right at our 2,596 (weak retrace) line yesterday and is only just above it this morning. We needed to go the other way, up to 2,728 and that's not likely to happen today but we are playing bullishly in our live Member Chat Room as follows:

Well here's the test of 24,000 and we're failing that and 2,600 and 6,350 and 1,470 but those are now the lines we want to play long if we move back up but very ugly if we're failing that. 

As long as 2,596 holds, we're willing to have a long on the S&P Futures (/ES) but it would be nice to have a confirmation from the others to let us know we're on track. It's sad that I have to say this for the 4th time this week but yes, we still like Gasoline (/RB) long at $1.755, which is the 2.5% pullback line from $1.80, which we certainly expect to be back to into NEXT WEEK's holiday and that will pay about $1,800 per contract if we're right.  

We were right yesterday with our gasoline trade in the Morning Report and, as you can see here, 4 contracts made us a very quick $2,104 so you're welcome for that one and now our FREE Futures Trade Ideas are up well over $10,000 for the week – not bad! Keep in mind we're only following our 5% Rule™ but that's how I was able to tell you yesterday morning, pre-market:

Bear (oops, don't say "bear"!) in mind 2,684 is likely to be rejected on /ES, so that's the point at which we want to take profits on /NQ (6,605) and /TF (1,510) and then, if we brake over, /ES becomes a good play over 2,685 with tight stops below along with the others (and /YM should be 2,850).  That's all it takes to play the Futures and we call that our Pony Express Strategy, where we ride a horse up to resistance and then get a fresh horse for the next leg up.  All the futures contracts pay similar amounts for similar moves, so it doesn't matter which one we play so we go for the one with the best lines at any given moment.

Not much else to do but watch and wait today.  Unless we're over our strong bounce lines tomorrow, we'll be re-hedging into the weekend (we're a bit bullish at the moment) but I'll be surprised if we clear 2,700 – let alone 2,728 and that means we're back to the same hedges we were using before the crash.  

Meanwhile, enjoy the bounce but "Don't get excited!"  

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Disclosure: Our teaching theme at Phil's Stock World is "Be the House, NOT the Gambler." Please see " more

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Bruce Powers 4 months ago Member's comment

I disagree.