mike reed

Tradestalker’s R.B.I Update

Posted in Commodity News Updates, Futures, Market Analysis, Tradestalker's R.B.I Update, commodities, mike reed, tradestalker on March 3rd, 2009 by Mike Reed – Comments Off

TradeStalker’s

R.B.I. Trader’s Update

3 / 2 / 2009

(Published Since 1996)

Dateline: 6:54 pm eastern time, 3/02/2009

The market gapped down on Monday, and buyers stepped to the plate and the market bounced a bit. However, the move fizzled at 724.50 on the ES about 30 minutes into the trading day, and a trend down move was underway. Around 1:30 p.m. the market made its only counter-trend bounce of the day, as the ES went from 703.00 up to 712.50. That coincided with the 60ema on the 5 minute chart, and the market rolled back over. The ES finally dropped under 700 with about 20 minutes left in stock trading, reaching a 698.75 low before reversing. The rebound took the ES back to 706 and it settled well above fair value.

The market showed a bit of capitulation on Monday. Only 203 advancing issues on the NYSE is rare, and the closing Trin above 3.50 is normally a sign of panic selling. This should set the stage for a decent rally attempt on Tuesday. There is some economic data on the docket before the open, and also the ISM Index at 10 a.m. eastern time. If this turns out to be the case, it looks like the ES should make an up- down-up type of pattern and then one more drop to test/break the Monday lows. We’ll see how that plays out. If it does, then a reversal should mark a good trading low for a good sized snap-back rally.

On Tuesday look for early strength to fizzle to set up a trade on the short side, and then the first decent pullback should set up a buying opportunity when the downside slows and begins to turn back up. On the other side of the coin, if there is an early drop under 700 on the ES, and then the market turns back up through that level, it should spark a decent rally. After the early going, as long as the 700 level on the ES is held, the market should be “ok” for a decent rally. If the ES goes under 700 and can not quickly reverse, then the market is still in trouble and the ES will probably drop another 10+ points before getting footing and turning back up.

Good Trading,

Mike Reed

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