The Fundamentals Of Emini Futures Trading

(QQQ)(SPY)(UA)(AMZN)(FB)

by DeWayne Reeves

"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."   Robert Frost

Fundamentals Of Emini Futures Trading

As Technical Analysts by trade, it is often difficult to pick up the newspaper and surmise how the hive mind will choose to react to a given set of circumstances. From hurricanes, to crop reports, to Presidential elections, that fact of the matter is -  public opinion does become group action which ultimately turns into ticks on the tote board.

Fundamental Beliefs

It has been suggested on this radio program more than once that technicals front run fundamentals. It's a "beautiful mind" type of argument best reserved for front porches over iced tea. The purpose of this radio program and blog, is to help you the trader do one thing - Earn Money Daily. That's our goal.

We've been told that's a foolhardy objective yet we pursue it with vim and vigor. If you owned a Subway franchise, would it not be in your best interest to arise each day prepared to do your very best work, to build the very best sandwich, to manage your employees with professionalism and compassion? To address each and every customer as though they were the sole reason for your arising this day, and that you have no greater goal in life than to satisfy their hunger in both a healthy and artistic manner?

Do not all of these individual tasks when brought together in a warm bun and sprinkled with a dash of well thought advertising result in net profits for your efforts? Is it unwise for the franchisee to antipate more cash in the drawer at the end of the day than in the beginning? Is it unrealistic for any man to go to the factory, the paint store, or the sandwich shoppe with a goal of earning their daily bread? Isn't that why you bought the franchise in the first place? Isn't that why you became a trader?

To me this is a a basic fundamental example of how any man, (even you and I), can become successful men. Whether you're a sandwich maker or an emini trader, you're in it for the money no matter how much you protest. Unless of course, you don't really need the money much like the umbrella in our opening quote. Then it all becomes a hobby, a field of study if you will, a gentleman's farm of sorts. If in fact someone does not need the money, if someone has excess capital and no matter what opportunities are missed or mistakes made, the bills still get paid, the kids still go to college and no one gets an ulcer, blessed is the man I say.

Even at a s-t-r-e-t-c-h we'll say you've embarked on this adventure for the purpose of some loftier reason, a more admirable goal than simply lining your own pockets with filthy lucre. Perhaps you have a mission, a motivation, a call on your life greater than yourself...

Imagine that. How dare you wake up with the goal of making a buck. Don't you know it will mess with you, screw up the delicate balance of the universe, bring on gout and possibly turn you into a highly effective person? Who needs that... Right?

For me, peace of mind comes when each day is foreshadowed by a humble goal that is easily defined, realistic, attainable and measurable. This is one of many fundamental beliefs I hold in regards to Emini Futures Trading.

Fundamental Facts

We've discussed two opposing fundamental beliefs as they relate to Emini Futures Trading. Now we will move on to a fundamental fact. The difference between a fundamental belief and a fundamental fact is quite dramatic as the name would imply.

be·lief/biˈlēf/

 

Noun:

An acceptance that a statement is true or that something exists. Something one accepts as true or real; a firmly held opinion or conviction.

fact/fakt/

 

Noun:

A thing that is indisputably the case. Information used as evidence or as part of a report or news article.

We will use Hurrucane Sandy as the basis for our fundamental fact finding mission. No matter what one believes about hurricanes and the effect they may or may not have on the markets or the economy, no belief, no matter how stongly held, can change the facts. If however, a large enough group of people begin to subscribe to a specific set of beliefs over an extended period of time, it can and ultimately will hold sway over the future and eventually become the fact.

 

For the purpose of this discussion we will use historical facts that are already in evidence. No matter what I believe the market will do tomorrow when it reopens, the fact is from a historical perspective it will rally. There may be a knee-jerk downward reaction but as cooler heads prevail the market will move higher. Why?

 

The fact is, just as war creates jobs and spending, destruction and devastation lead to the exact same economic outcome. Insurers will pay claims, consumers and businesses will hire construction crews, materials for the purpose of rebuilding will be purchased, even our friend the sandwich maker will most likely see an up-tick in his business as well. As the pot of commerce is stirred, all boats rise. If you are on the long side of the market as an emini trader, based not on your belief but on history, statistically and logically you are on the right side of the street. That is one of many fundamental facts I will teach you about Emini Futures Trading.

(I assure you no talk show host was harmed in the creation of this post)

Fundamental vs. Technical

Which really comes first? This is a classic chicken and egg scenario. As much as I want to say it is the technical, I realize my view is skewed by years of work as a technical analyst. I challenge you to become an observer. Watch the market as well as the news. Take good notes over the course of your study and perhaps someday you'll write a guest blog on this very web site that convinces us all, once and for all.

S&P 500 Emini Futures

The Globex session has been extremely quiet since the open this afternoon. Based on the "Dark Cloud Cover" pattern we suggested that somewhat lower prices were in order. As you can see from the following Tweet released at 4:02 PM PDT, we have seen slightly lower prices inside of a market almost as eerily quiet as Times Square.

ESZ2 watch for lower prices. current price 1410.75. Possible support at 1405.00 $ES_F #ES #Emini #Trading

— DeWayne Reeves (@CFRN) October 30, 2012

(ES) Emini Futures - Dark Cloud Cover

The charts call for potential support at the 1405.00 area is obvious and well documented based not on a Fundamental Belief but a Fundamental Fact. Given the current conditions of the market though and the underlying desire of the market to rally, is a test of the 1405 Zone required? Absolutely not.

Weekly Trading Zones have however, passed the test of time and proven they work independent of the hive mind.

Or do they?

If you attend our seminar this spring perhaps the answer will be on the menu.

All CFRN Partners who understand our methodology will see the yellow arrow in the lower left hand corner of this chart and understand to a man (or woman) this very clear call for higher prices. The tale of the tape reveals the move to follow was just over 12 ES Points.

Euro Currency

The Euro is poised to make a bold move as I type. Consider being short below 1.2925 or long above 1.3015. This will go out as a Tweet to the Twitterverse, as soon as I finish this post.

(6E) Euro Currency

THE SECRET LIFE OF CANDLES ©

Webinar w/ Steve Bigalow 

Wednesday October 31, 2012

4:30 EDT / 3:30 CDT / 1:30 PDT

Doji - Dark Cloud Cover - Harami - Mumbo Jumbo? Far from it. Steve had taken an ancient Japanese Art and trimmed it down to 12 major signals out of hundreds. Can you learn them all? Sure! The good news is, you don't have to. Come to this webinar and without purchasing a single thing, you will walk away with information that will forever change the way you trade. 

A Candlestick is simply a graphic representation of investor sentiment.

10 words that may change your trading forever. Many of you are awaiting the release of my book: 

THE SECRET LIFE OF CANDLES ©

I appreciate the loyalty but do yourself a favor and don't miss this golden opportunity to wet your beak with the man who taught me everything I know about Candlesticks. Show up in force, ask great questions, and hopefully Steve will be returning as a regular part of the CFRN Crew.

In 2005/2006, Steve was one of the first voices of CFRN along with Dave Floyd of Aspen Trading. I'm excited that Steve and I have reconnected and I know that you've heard me recommend his books for years, now you finally have the opportunity to meet the man behind the candles.

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