The beginning of the E-mini's and emotions

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The bull market continues.

Yesterday and today were important for technical traders. Bulls win and I don't mean Chicago Bulls. We tested and held the 50 day m.a. We also tested and held the trend channel on a daily cash chart. This area was very important for the bull market to continue. Today in my morning brief I told my subscribers that the bulls are still in control of this trade. This means that we continue to hold key areas of support and the market continues to reward the longs when they buy these key technical areas. The question that everyone asks me is how long will this continue? I say the same thing to everyone that asks this question "it will continue until it doesn't." Right now the market continues to hold areas of support so continue with the trend, don't fade it. I know that sounds vague and disappointing to most people but that is the truth. This is why we need technical analysis to help us in our trading. When the market continues to reward you for what is working then why do people always want to fade it and see a change of direction. What I have learned over the years is not to make bold predictions but to allow things to happen until they prove you otherwise. Always trade with a free mind and execute according to what is working in the current environment. Let the market dictate your trades.  To answer the question about when the bull market end; when the market fails to hold key support levels and there is high volume selling below those key support levels, then you will know that sentiment has turned bearish.


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We will be discussing the beginning of electronic trading and also is it possible to be emotional and a successful trader. We will be taking questions as well. Tag your questions with #eminix.




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NQ - ES spread signaled to be short.

This morning I wrote in my morning brief that it looked like it was going to be a bearish day with the Dow Industrials, Dow Transports, and S&P poised to open below their daily uptrend.  On the cash open the S&P started to sell off along with the Industrials, NASDAQ, and Transports following suit.  The VIX started to rally higher looking to test its 50 day m.a.  All signs pointed down.  With all of that being said, the S&P made a low of 1328.00 and then took off to the upside getting back above its daily uptrend while the VIX turned back down on its belly.  The S&P led the major indices higher while the NASDAQ lagged.  It seemed as though the shorts might get blasted again but the S&P ended up making a good technical high at 1341.25, the 10 day m.a. We were also only 2.25 points above my daily pivot at 1339.00 and I noticed that NASDAQ-S&P spread was remaining weak.  This daily spread chart had several tops around 1060.50 and I had noticed that back in February the spread failed from that area and the S&P was pulled down by the sudden weakness in the NASDAQ.  When the spread failed to hold this same area again and the NASDAQ was lagging the S&P in the morning rally that was the confirmation to stick with selling the S&P.
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Are true traders educating?

I am writing this post due to my frustrations with the lack of true E-mini traders out there teaching people how to become professional traders. The amount of disrespect I am seeing from traders claiming to be professionals or the biggest traders from their pit (which I know for a fact that they weren't even in the top 100) really pisses me off. If they actually got hit on a big trade I am not sure that they would even know what to do with it. The top traders from the S&P pit are either retired or trading on screens, not teaching people how to trade E-mini's.  There are a few big traders still in the pit, but they are just passing time. I talk to all of my friends from the pit and they say the same thing to me over and over, "the lack of volume in the pit does not allow us to be players anymore, the E-mini has completely taken over". The biggest players on the street are all E-mini traders. Lets face it, E-mini traders have dominated the market over the past few years not pit traders. Yet a lot of people who have big followings for education on E-mini trading are guys who have made money as pit traders (or at least claim that they have) and decided to make money teaching people how to trade E-mini's. These guys couldn't trade their way out of a paper bag on the E-mini but they claim that they are professional E-mini traders.  Don't get me wrong, many of the concepts from pit trading apply to screen, but E-mini trading is an entirely different animal. Don't even get me started on the guys that traded E-mini's for a year or two and made a few bucks then start a company based on their past success.  They had a 6 month run in trading E-mini's and then suddenly they become an expert.  The only thing they are is lucky.  They now make more money selling b.s. strategies on how to trade on the screen.  They don't talk about mindset, approach, a complete trading plan or even as basic as a morning routine to get yourself prepared for the day.  They just believe that strategy is the answer and leave out the most important part, the mindset.  The mindset is what gives you the ability to execute a strategy without hesitation.  It leaves emotion at home where it belongs.  I guess more power to them if people are buying it, but i'm not buying it.  I know what it takes to have a career in trading and that takes more than 6 months to figure that out.  I have been in this business for 15 years, trading for over 13, and I still struggle at times.  No matter how good you are there are times where you just don't have it.  The key is to recognize this and limit it.  I am involving myself in the education business to really help people become successful at the greatest job on earth.   My passion is trading.  Everyday that I can sit in front of the screen and trade it is a privilege.  I often wonder if any of these so called education guys even have accounts that they trade for themselves? Do they even trade everyday?  I doubt all of the above.

I don't want to totally bash the education business and I will definitely give props to some of the education guys out there, but for the most part they are all salesmen.  As far as I am concerned a professional trader and educator is someone who pays their bills with the money that they make from trading, not educating.  90% of my income comes from trading not teaching. Teaching people how to trade gives me great satisfaction and I take it very serious.  Teaching people how to trade is all about giving people  a chance to truly become successful, not telling them where to point and click.  It all starts by giving them the correct mindset and proper trading plan. I wish that I would have been able sit down with a trader that was successful and learn how to trade directly from them.  It would have saved me a lot of time, money and pain.  I still believe that no matter who teaches you how to trade that you will have months of growing pains.  I have been around some of the most talented futures traders ever to put on a jacket and it still took them time to become successful.  The best advice I was ever given by a trader was "99% of people who try to become traders fail, learn to be the 1%".  I learned that the one thing that they all had in common was passion to be great and a trading plan that promoted growth, not limitations.  I have spent countless hours in front of my screens learning strategies and creating rules trying to put together a trading plan that would put me in that 1%.  I have accomplished that but it is still a constant challenge to maintain it.  Although I have had more heartbreaks and struggles than I wish to remember, I would't trade it for the world.  Trading has taught me many life lessons and given me the freedom to live the life that I always wanted.  I remember the first four years of my trading career when I must have been told to quit over a hundred times.  Quitting wasn't the answer - instead I taught myself to become the 1%.
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The Morning Brief 5-6

Morning Brief 5-6
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I am taking your questions about trading futures May 11th at 1:30 ET.

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May Newsletter

May Newsletter
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Last week was an important week for Technical Traders in S&P

It all started with a test of the 50 day moving average. This was the first test since March 29. We violated it and then closed below it. The next day the market rallied above it to only close below it for a second time. I thought this would make the longs a little scared. When the S&P is near the 50 day moving average I make sure that I am aware of what the VIX is doing. The VIX tells me if there is any panic in the market. Traders go to the options market to hedge their positions, so when this happens the VIX rallies. The VIX was staying weak signaling to me that there was little or no concern about this violation of the 50 day moving average in S&P. This told me not to be a seller but to be looking for areas to buy. I wanted to be a buyer but I have been watching an upside down head and shoulders forming for about two, three weeks and I knew that we were close to the trend channel which would form the second shoulder. Knowing this I waited for the market to test the the trend channel to confirm the upside down head and shoulders. The futures failed to test this trend channel but the cash tested it and held. From this point on I knew to be a buyer. First the VIX is not rallying but making lows for the month and we had confirmation that the upside down head and shoulders was now intact. The bulls did not get shaken out by the violation of the 50 day moving average, they only added to their positions and then got confirmation in the SPX by holding the trend channel. The VIX kept me away from being an aggressive seller like I normally would be with a violation of the 50 day moving average, but turned me into a patient buyer and then and aggressive buyer once I got confirmation from S&P cash chart showing me that the trend channel held.

S&P Cash Chart

E-mini S&P Chart

VIX Chart

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The Morning Brief 4-12

Morning Brief 4-12
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Ask Anthony 4-10

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The Morning Brief 4-8

Morning Brief 4-8
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The Morning Brief 4-7

Morning Brief 4-7
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The Morning Brief 4-6

Morning Brief 4-6
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April Newsletter

April Newsletter
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The S&P 500 hit two major points today

The S&P 500 hit two major points today.  The first major point was hit this morning when we had a test of the 50 day moving average at 1300.18 in the Futures. 1300.25 was the low of the day and the 50 day moving average held with ease.  Once the low of the day in the Futures was the 50 day moving average, all eyes shifted to the second major point; the down trend for the year at 1314.50.  The market then grinded up the rest of the day looking to test the down trend.  The market not only violated the down trend, it closed above the down trend.  The bulls are in full control.  They got everything that they wanted today, even the VIX closed back below its 50 day moving average.  From here I am looking for the market to test the highs for the year.  Thursday is the end of the quarter and the highs of the year at 1337.75 could be tested by then.  I included a copy of today's morning brief.
Morning Brief3-29

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Morning Brief March 15th

Morning Brief3-15


If you would like to recieve The Morning Brief please click here.
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S&P confirms with VIX that a correction has started.

This is a follow up to  to my last post.  At that time I noticed the VIX  was signaling that a correction was coming in the S&P.  I believe that today the S&P confirmed with the VIX that the correction has now officially started.  I have a feeling that there will be institutional and hedge fund selling now coming into the market.  I believe this because we have broken a major trend line and this is the first time we have been below the 50 day moving average since Sep. 1, 2010.  The question is where do we go from here?  Last time we had a violation of the up trend in the S&P it had a 120.89 point break the following week.  Last time the VIX violated its down trend it rallied 19.62 the following week.   Also noting that the MACD could soon turn negative in the S&P and the VIX MACD is already positive.  All that I know is today's action was very bearish and the buying has finally seemed to stop.   The down volume today was 88% of the up + down volume.  That is not good.  Looking at the charts I believe that next week could be a wild one.
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Is the VIX signaling a correction in the S&P?

The VIX is telling me that the S&P is on its way to violating the current up trend starting a correction.  I say this because when I look back to Feb. 1st 2010 the S&P started an up trend and the VIX started a down trend.  The VIX ended up making a low at 15.23, from there the VIX began to rally and then violated its down trend.  The S&P then followed by violating its up trend.  The VIX triggered the start of the correction in the S&P.  The recent low in the VIX was 15.22 and now has violated the down trend.  Repeating the same pattern made from April - May 2010.  I now wait to see if the S&P confirms by violating its current up trend.
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March Outlook

As of today the S&P, Dow and Nasdaq are all up about 4% YTD.  The Indices are all moving at about the same pace.  The leader to the upside has been the Nasdaq but as of late the Nasdaq has struggled more than the Dow and the S&P.  The Nasdaq is usually the leader of the market in terms of percentages.  They usually outperform to the upside and exaggerates the downside.  Which ever way the Nasdaq starts to head this month the other two markets will probably follow.  The bulls have a thorn in their side  and that is Crude Oil.  Now that Crude Oil is comfortably above 100 I believe that is a problem for stocks.  If Crude continues on its run we will probably start to fall.  The other factor in the market that I believe could hurt stocks is that Gold made new highs for the year.  Gold opened this year on its high and was down about 7% at one time only to rally back and now go higher for the year.  I believe this is a problem for stocks because high Gold prices tell us that there is still fear in the market.  Aside from all the issues that are bad for the stock market the tape itself is not telling you to be worried if you are long.  I believe that the recent move down in equities has held areas of importance.  I watch the 50 day moving average because so many funds and institutions watch this average.  It becomes a big pivot for the market just because so many eyes are on it.  As of right know that moving average is 1293.54 and we are holding an up trend from Sep. 2010.  Failure at this trend line should result in a test of the 50 day moving average and that is where the market will show its true colors.  The rest of this month I will be listening to news in the Middle East and the price of Crude Oil, but I will also be focusing my attention as to whether or not we get a Dow Theory confirmation to the downside.  The Dow Jones Transports are well below their 50 day moving average and have confirmed to be in bear territory but the Dow Jones Industrials have not yet confirmed. A Dow Theory confirmation would change the trend of the primary market from bullish to bearish.  The DJI has to close below 11823.7 to confirm Dow Theory.  If this happens I believe that this will pull all Indices lower and the correction that is widely talked about will begin.  Until then and only until then will I become a bear in this market.  I will be eagerly waiting to see what happens.  I have attached some charts below to show you what I have been talking about.  I hope everyone has a great month.  Thanks, Anthony (DELI)
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