Stock, Option and Futures Trading

Stock, Option and Futures Trading

NQ Outlook + BTU

June 28, 2011

Over the last few weeks we were saying that coming into the 2200 low that the low was most likely going to be support based off the pattern. We did have a hard move down to that low but as far as the pattern we would be at that low no matter if we went slow down to it or fast. The levels of the pattern are the levels no matter how fast or slow the market is trading.We also noted from the 6/1 high that the market could be a fast drop (the .382 portion) of the pattern.

We received a more than usual amount of emails saying we were wrong in saying we should hold and that the market was going to tank. I agree, in the last leg down it felt like it was major but in reality it was only a minor move to the downside also noted in prior posts. To see how minor it is look at a weekly chart and compare the move down to prior moves to the downside and you will see it is a minor wave.

It is not us being wrong or right it is us following the patterns we trade. Patterns can complete as true or they can fail and be false but we will always bet with the pattern until we are proven wrong. We have said before that we do not listen to TV because in reality TV is just stating the obvious and telling us what just happened. Also, they like to put a spin on it like “We have not been down this much in 9 months”!! or whatever the case might be at the time. One day everything is so bad and the next everything might be ok again.

Patterns are only as good as you are at reading them meaning; In my 17 years of trading I have seen 100 people use the same pattern 100 different ways. This is why just knowing a few patterns is not good enough. What will get you to the next level is knowing what pattern should come next after the current pattern and what to look for to see if that will in fact happen. Have you ever heard the saying ” be one step ahead”? That is how we trade the markets meaning; we are looking for odds on the next pattern because the current pattern is old news EVEN if we are not done completing the current pattern.

Overall we could go down and actually it would be normal to go down to the 2130 but that is multiple legs away. For right not we are focused on the 2300 and the 2330. It will be important in how the pattern looks up to those levels. Where the NQ closed today I would not be surprised to see some selling come in tomorrow.

Most new legs to the long side start with a short squeeze and we have had that off the 2180 low. To some this came out of no where. I heard CNBC say on Friday you would have to be crazy to hold long over the weekend. (Ok so I do sometimes have the TV on) but the point is they were not seeing the support and they missed out on the calls we did on multiple stock good for 100% on almost each and every play (400% on AMZN weeklies).

I would be careful long above 2300 and only look to scalp above that level.

If we start to fall we could easily come back down to the 2230.

I would start to scale out of some of the calls and put the stops at even. With BTU I would have the stop at $55.50 on the shares and look to scale out at $60.00 on the calls. BTU can go to $65 on this leg if it catches a short squeeze.


Happy Trading,

What our members are saying”

“Took your advice and did my first swing trade on futures on caught the NQ for 59 points long. I wish I would have done it with more contracts I only did one but overall great first swing trade”

“Using the scalper I am up 39 points in the last two days on the NQ and 14 on TF. The best part is I am not trying to pick the tops anymore and even when I feel like it might be a top I still go with it and it has worked out nice this week”

“Scalper in on fire!”


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