Thursday Failure at 3,420 – Are We Heading for a Actual Correction?


See how these strains work?

As we very accurately predicted yesterday, earlier than the market opened, stimulus speak was sufficient to get us to our 3,420 line on the S&P 500 – however no increased.  In reality, proper earlier than the shut and after our Dwell Buying and selling Webinar, I said to our Members in our Chat Room:

One other probability to brief at 3,420 on /ES with tight stops above.  Lined up with 28,200, 11,475 and 1,540.

This morning we’re down to three,380 on /ES and people Futures Contracts pay $50 per level whenever you get them proper and, to this point, we’re proper for 40 factors in order that’s a acquire of $2,000 per contract on our little hedge.  We’re not grasping, we take 1/2 off the desk and put stops on the opposite half at $1,500 to lock in positive factors of $1,750 per contract and, this morning, the breakdown strains we’re watching are 27,800 on the Dow (/YM), 3,375 on the S&P (/ES), 11,250 on the Nasdaq (/NQ) and 1,515 on the Russell (/RTY).  

If 2 of the 4 indexes fail their line you may brief both the third utilizing the 4th for affirmation or simply await the 4th to cross and brief with confidence and easily cease out if ANY of the indexes get again over the road once more.  What that does is restrict your losses to a superb line of resistance with out limiting your positive factors and meaning, if you’re incorrect, you should not lose greater than a few hundred {Dollars} however, if you’re proper, you can acquire hundreds – that is a superb recreation to play!

It does not work each time although, we are able to go months with out taking part in the Futures in any respect however, when circumstances are proper, we like to play them each day.  Circumstances now are a toppy market and worsening financial circumstances, poor coverage selections and the driving pressure to the rally (stimulus) has met the purpose of diminishing returns – looks as if a superb brief to me….

Congress stays deadlocked over a recent stimulus bundle. On Wednesday, Senate Republicans mentioned they’d support a scaled-back $300 billion version of their earlier $1 trillion…


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