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Looking at the September S&P 500 futures contract, it seems like a low-risk trade may be setting up. A downtrend is defined as
lower highs and lower lows. The initial sell-off from the highs first found support on 7/26/99 at 1352.60. In the hopes that
this support level will act as resistance, thus forming a lower high, one could go short on a reversal in this area and use either
the 1352.60 level or the swing high of the last two days for an initial stop. The objective would be a retest of the lows
(1272). If either the previous day's low is never broken or if the 1352 level is broken, one wouldn't enter the trade.
I don't have today's intraday data in front of me, but using yesterday's data, one would go short around 1325 with an initial stop
in the 1340 area (risk=15 points). The profit target is 1280 or 45 points, which represents a 3-to-1 reward-to-risk ratio. FYI
Those of you who follow LBR's stuff no doubt realize that a Grail Sale would also be triggered once the previous day's low is
taken out. It is also a First Cross pattern (Futures magazine 2/96).
Good trading,
Bill Bancroft
Johnny Storm wrote:
> Hey RT's
>
> I don't know about you all, but my gut feeling is the market is setting
> up for a fall. My long term indicators have gone "bearish" (5/6) and
> my short term bias for today is "down".
>
> We had three market Bias indicators on TRADEHARD.com pointing downward,
> plus my own indicators (3/5). I am curious is anyone reading the
> market like this today.
>
> Ochoa (Hedgefund Manager) went short yesterday and is looking for a
> target of 1325 in the next couple of days.
>
> So, for the day I will be looking for short trades on the 5 minute
> bars.
>
> JS
>
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