Testy Tuesday – Trouble at 2,800 – Again!

You’re welcome!  

In yesterday’s PSW Morning Report (subscribe here) I said:

7,200 on the Nasdaq (/NQ is a good shorting line for today as is 1,590 on /RTY, since that’s the 200 dma – tight stops above!

As you can see, the Nasdaq (/NQ) shorts were good for gains $2,000 for each Futures contract shorted while the Russell (/RTY) fell to 1,565 and that was good for gains of $1,500 per contract – not a bad way to start the week.  In case you are wondering – in our Live Member Chat Room, at 12:16, I also called the bottom, saying:

Hopefully that will be it, 2,780 though is a terrible fail of 2,800 and down 100 points on the Nas is a quick $2,000 and /RTY 1,568 should be support but, if not, could see 1,550.   Tight stops in any case but I’m happy with these gains! 

Keep in mind that we are Fundamental, not Technical Traders.  We call these tops and bottoms based mainly on the news cycle – even intra-day and the only Tecnical Indicator we follow is the 5% Rule™, which we invented to neatly summarize all the TA BS into one simple formula that FUNDAMENTALLY accounts for TA as a factor in our market calls.  Turns out, it also does TA better than any other system I’ve seen – but I still think TA is BS.

It doesn’t matter if it’s BS though, because – as long as millions of people follow something – it becomes a Fundamental factor anyway.  I crows flying east caused people to sell Apple, we’d be tracking crow migration as a Fundamental Indicator but not enough people trade on crows to make it relevant but enough people follow Elliot Wave, Ichimoku Clouds, Bollinger Bands, etc. to make it a signal we do pay attention to.  When we see the news flow coincide with support-resistance lines for Technical Traders – THAT is when we like to make our Futures calls.  

Meanwhile, the big call is WTF is going on with the S&P 500 at 2,800?  Yesterday was the 4th time since October we’ve been rejected at that line and, earlier last year, it failed on…

Provided courtesy of Phil’s Stock World.