Futures Trades

Tuesday, May 23, 2006


15min corrective 'a' done 'b' in progress

Tom: "Spike could you correct the error of thinking it's too late to take advantage of the bear trend? Or is it too late? Cordially Tom."

Hi Tom.

Excellent question. Many people are probably thinking just like you; is it too late to short this trend? Or is it now chasing? And how do we know when a bounce is going to come? You probably recall my thoughts re VIX on the bounce, and I'm still waiting for a close over 18.00. Until that time (and until Vector signals bull) I am a fully fledged bear. And as a bear the bias is short, resistance shorts are the edge, and long is wrong. It is what it is until it isn't I guess :D

Even if 18.00 weekly close of VIX comes, I'm still giving it a window of 10 days....and that's a long time for the bear to continue. It may close over 18.00 and bounce the very next day. Or it might sell for another 2 weeks, in a fashion similar to plunges of the past. The trick when the bounce comes is timing it. And to time it I'll use Vector, which has served me so well. Yes, Vector has a potential to lag the first day or two of a quick bounce. And that's fine. I can handle that.

Frankly, right now I view the broader market indexes and futures as falling knives...and attempting to catch them is an exercise in patience.

I would recommend that everyone respect this selling for what it is; impulsive selling, and to go to cash or hedge up and trade any good short setups with disciplined low risk setups. And if one gets it wrong and stops out or can't find a good entry short that's fine, just trade less, less size, lower the risk, doing more of what is working and less of what is not. If one cannot manage to exploit this selling then cash is King. And the bounce is likely to be significant when it comes....WHEN it comes. You want to aim to have dry powder and a fresh, sharp, emotion-free mind when it DOES come.

For my market bias, I want to see something bullish first. I want Vector to close bullish. I have my lines in the sand, and I know exactly what I'm looking for. I haven't seen it yet. If anything what happened this afternoon was an indication that the market is in for further significant downside. Remember that daily C I charted up. That C just failed on big volume, with force. No ifs buts or maybes. I've shown plenty of charts where Cs have failed and we've all seen enough to warrant respecting them.

But that said, I don't know what the market will do tomorrow. It may rally hard and get over the C again, just like it did last time. I remember calling for caution longs that day and retracted it as soon as the strength took it over the C pivot. And this time is no different. It's Uh Oh Mildred while that C has failed. For me now, it's all about holding the few stock shorts and adding to this YM short with a) resistance discretionary setups or b) Vector signals. The days ahead are going to prove very interesting. Will I get rewarded with that Big Blue 5 I'm looking' for? How many subwaves will the move have? Or will the market wake up in the morning and buy the weakness? I dunno. But the game plan is in place and I'll be tradin' it......just like every other day. Or at least trying :D

And my advice is to try to remain focused on the important aspects of trading, of discipline, of stalking patient entries, of waiting for perfect setups, of using the risk/reward numbers to your favor, of remaining disciplined, of executing without hesitation, and detaching from emotion. Emotion is the trade KILLER. Emotion will have you scared to short for fear of chasing and being too late and then missing more significant downside. And emotion will cause one to miss the smart support entry for fear of heavy selling in the face of a trade who's timing is off. Emotion will mess with your head and cloud your chart reading. And to overcome all that bad emotion one must focus on the game plan. What is the game plan? What is the margin and tolerance for pain? How big are the stops, and what are the targets. And it comes back to the simple and undeniably important concepts of support and resistance.....and finding those setups that make sense around those key areas. If one shorts, then short at solid and sensible resistance, and take one's pain like a soldier if that resistance breaks.

The YM is in a 5 down off a C short area....so I am justifiably looking for 5 waves down off it. This red 5 down is the first wave. The correctives are now the 2 up and 345 are to come. Until a C failure or some other pattern that justifies changing the plan, it's stalk 'em short.

Best to yall.


After hours correctives off the 15min.


The Fuzzy Update

Some people hate Elliott Wave theory. And some people hate the way I do Fuzzy counting of Elliott waving. And that's OK. Some people just don't get it. YM has done the fuzzy counting proud. And the Vector swing trading system has done itself proud too! That latest swing short signal today nailed it for a quick +170 points in the space of 1hr 40 minutes. And it ain't over yet dudes.....I will be likely holding now for 5 more subwaves down ..... perhaps to levels of 10800 or so.

Here's the latest. The concerning thing is that it's going to break a major C support area on the Dow. That's "Uh oh Mildred" time dudes. Until the bull gets its hocks back over the C after this dump I strongly warn everyone against establishing new swing longs unless you are nimble, and disciplined. Scalps, no problem. Do not compromise stops at this time. It could really bite hard if you do. Hedge if you're long and not sure what to do. There are critical times to hedge, and a C failure is one of them.


YM 15 min C failure


YM swing short 11200

As per CBOX
23 May 06, 14:17
Spikefader: Swing short 11200. Risking 30.
23 May 06, 14:16
Spikefader: Swing short signal right here.
23 May 06, 14:11
Spikefader: Just waitin' on the Vector to signal now....

Risking 30. Targeting the 5th down on the 120min chart.


YM short as mentioned fills. EDIT: stopped out -13

Holding for the 5th down on the 120min.




Short setup

Note the red and green risk reward bar. Planning a trade with that kind of ratio is an edge. Identify your reward AND your risk. The pattern supports the target, and the risk matches the setup in a statistically significant manner. It's a good setup regardless of whether it rewards or stops you out. The difference is only discipline.

As I type I notice the neckline is failing prior to the pop to the 11200 entry. Ah well, still worth posting the plan; was a good one; just a little late hehe.

I also note the 15min 'c' is yet to confirmed itself as completed


YM 15 min chart.

The 'c' is yet to confirm.


Strangle with Qs

I'll revisit these quotes in several days and see how it played out.


4/c resistance/pivot


5min SHS targets key support


Fuzzy Count

Vector closed firmly bearish. Bias is short. I do note that VIX is close to closing over 18.00. If that should occur, I anticipate a major low to establish itself within 10 days.

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