Emini FuturesCast / The Daily Pod 08/03/11

(QQQQ)(DIA)(SPY)(GLD)(SLV)

by DeWayne Reeves

Are we there yet? Great question! I don't know...

Here's what I do know. We tested the extreme lower range of our Weekly Trading Zones and bounced back. Today's only Tuesday. Today we had an interest in selling rallies. If we can open positive tomorrow after the Asian and European sessions, we may be prepared to buy the dips. If we do buy dips they will be on a very short leash in the grand scheme of things.

I had an interesting conversation today with a very intelligent fellow. He said to me "I'm a trader but I'm not a scalper". Which caused me to think about a comment I hear at least once a week "I'm a short term investor". hmmmm.....

Which box do you come packaged in?

Are you a day trader?
A swing trader?
A 5 minute chart trader?
An hourly trader?

Maybe you're a bottom picker.....

Or perhaps you come in a plain brown box with no label. "I just play the markets".

OK.

We all put ourselves in boxes when it comes to trading and other areas of our life as well.

"Little Boxes" is a song written by Malvina Reynolds in 1962, which became a hit for her friend Pete Seeger in 1963.

The song is a political satire about the development of suburbia and associated conformist middle-class attitudes. It refers to suburban tract housing as "little boxes" of different colors "all made out of ticky-tacky", and which "all look just the same." "Ticky-tacky" is a reference to the shoddy material used in the construction of housing of that time. 

If you've never heard it, have a listen (strong language warning on the comment section)

So which box? It's an important question because unless you understand who you are as trader, you have a problem. If you were having lunch with the Sage of Omaha and shared with him how you average 3 weeks to 2 months per trade, guess what he might very well consider you to be. That's right,  a Scalper. Now we all know that day traders are at the bottom of the food chain to the rest of the world, but to real he-men day traders, their disgust is heaped on the lowly scalper, poor fellow.

trad·er/ˈtrādər/Noun

1. A person who buys and sells goods, currency, or stocks.

scalp·er/ˈskalpər/

Noun: A person who resells shares or tickets at a large or quick profit.

investor: verb

someone who commits capital in order to gain financial returns.

I didn't make this up. Go Google it yourself. Now that you have been freed of any popular misconceptions you may have held about yourself or others, ask yourself the question again? Did you get the same answer? Maybe you need time to think about it? Excellent. If you're thinking you're on the path. Please send me an E-vite to the box burning party at the end of your journey.

Bottom Testing

Do we have a short term interim bottom? We won't know until after the fact now will we? We can however get a pretty good idea of what the possibilities are. I mentioned earlier and last evening that we had tested the extreme lower range for this week. Let's draw a picture -

Looks promising eh?

Perhaps I'll tweet a trade later.

Tomorrow night - Partners Meeting 9:00PM EDT

Not a partner? No you can't come to the meeting. You also don't get the $75 monthly rate for the Live Trading Room and the Weekly Trading Zones. Like they say on TV - Membership has its rewards.

E-Mini S&P 500: Slip Slidin' Away!

The E-Mini headed for territory that it has not seen since December of 2010. The deep selloff to $1230.25 was steeper than anticipated warranting thoughts of an oversold status. The delayed debt ceiling plan and potential downgrade within the near term had left uncertainty in a nervous marketplace. The manufacturing sector was the most hopeful and service sector data coming from Asia, Europe and the US were quite weak evidencing a slower growth in manufacturing. The Institute  for Supply Management reported that the services index was down  to 52.5 from the 53.3 in June. The forecasts had come in at 53.6. The new orders fell 51.7 from 53.6 and employment was down to 52.5 from 54.1.  Factory orders were down 0.8 after a revised 0.6 increase in May. The manufacturing makes up about 12 % of the GDP. ADP Private Sector jobs added 114,000 jobs while analysts’ were looking for 115,000. Forecasts are coming in for the US Initial Jobless Claims for tomorrow and Fridays US Unemployment report. Treasuries and the metals have benefited from the dour economic environment.  A downgrade may possibly alter the appeal of US Treasuries. The Treasuries continue to be the most liquid and stable market for foreign funding in the world. China’s central bank’s governor had encouraged Washington to act responsibly when dealing with the debt situation fearing that any instability may detriment growth and impact the international monetary system. President Barack Obama may be visiting the Mid-west to get feedback on vital issues such as job creation, measures to increase growth and the economy in general mid August.      

Tomorrow, the market may take on a “We dodged the bullet” attitude and look for possible buying opportunities. It seems that after a good dip, there is found a buoyancy to bring it up a bit. It will be interesting to see what will boost us from the downgrade and recovery jitters to more of an opportunistic trading environment!

Thursday, we have the US Initial Jobless Claims at 7:30 AM CST.

Thursday, what to expect! We are technically still in sell mode on the Daily Chart!  Tomorrow, we anticipate an inside to higher day as the severe moves of today spiked down into a potential oversold zone. Today’s range was $1258.00 - $1230.25. The market settled at $1254.50. Our comfort zone or point of control for this market appears to be $1250.75. Our anticipated potential range for Thursday’s trading could be $1265.00 - $1245.00.  The market stays bearish below $1314.75.

Leslie Burton
Senior Market Strategist

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Podcast for Wednesday 08/03/11