Stock, Option and Futures Trading

Stock, Option and Futures Trading

$INDU Daily Chart


June 18, 2011

It is always important to take the time to look at the bigger charts even if you are only a scalping the market. All of the smaller time frames are trading inside the bigger time frames so to ignore the bigger chart is a big mistake. What is more important Daily chart levels or five minute chart levels? The answer is always the bigger chart.

When talking about the bigger charts we are not talking about obvious support and resistance from prior highs and lows by the time the market reaches those levels all the trading opportunities have pasted or I should say the good trading opportunities have passed.

Looking at the Daily $INDU chart you can see we are still contained in support off the last wave. The last wave labeled with the blue arrow is what we call minor so the end result is that the DOW is still contained in support off the last minor wave. I know this is the opposite of what TV has been saying and how bad the market is but for us to be holding a minor wave is technically still strong. We always have to look where we came from not just the result of six down weeks. What about the last leg up which was seven Months of going up?

What is stronger seven months or six weeks?

With trading it is all how you look at the situation and the thoughts that are obvious or on the surface are just that OBVIOUS. If you only stick to the obvious thoughts you will most likely always be chasing the market and feel like you are too late (buying the highs and shorting the lows).

Yes, we could start a bigger correction but like I have said it is too early to really say for sure. In our opinion it is best to obey the levels in each leg. Remember it is multiple legs that equal the bigger more powerful pattern.

If we do fail this pattern we could come back down to the blue lines and this would be correcting the white arrow or the bigger wave. Even if we do come down to the blue lines that is a bigger buy level.

When would we know we would go down to the blue lines? If the $INDU goes up to the 12,400 level and fails. There will actually be two legs off the 12,400 that will tell us what we most likely happen.

12,400 to 11,300 could be a great short if it fires off but it is too soon to say it will happen for sure.

Monday if we get a fast push to the downside we are thinking it is the move down to put in the low of this leg down. We always have lower and upper targets because we do not know how the market will open but we do have a outlook that we stick to and the outlook can tell you if we are extended in the leg and this has value to say trade less contracts and do not look for a huge trade in extended market conditions.

Happy Trading,


PS. The ES, NQ, TF and DOW all look a little different. It is best to take the time to look at all of them because you do not know which one will turn the market. If you are taking the time to do the bigger research you could still be missing the real story because you could be researching the wrong one.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: