Market Update June 17

If you trade the S&P futures there was actually an opportunity to go short at the break of Friday’s low on Monday.  Because the market failed to break out on Thursday and continued to fail on Friday, this gave us an opportunity to take advantage of any weakness on Monday. 

Here’s a 5-minute chart of the S&P:

I ONLY trade breakouts, no matter what timeframe.  Flag-Trading is all about trading breakouts from logical and safe areas.  If there’s no breakout, I’m not in the trade, and therefore I cannot lose.  If there is a breakout, then I must always have certainty as to where my stop loss is and where my profit target is. 

What I’ve just shown you is the result of something specific I’ve been researching for several months, and soon I’ll be able to show you more. 

For now though, it’s worth a reminder that breakout trading is a wonderfully safe way to trade.  Sure, sometimes we have to be patient, and that’s certainly been the case recently.  But when the market goes on a serious run, we make fantastic profits very quickly. 

Should these couple of down bars on the major indices consolidate, we could be in for a stunning down-run which we can all take full advantage of.  But remember, we need that consolidation first, and then we trade the breakout. 

Also remember, we only trade what you see, and we don’t predict.  After two big down days, it’s likely we’ll see some sort of bounce back reaction in the S&P and Dow.  What I’d like to see is more of a muted consolidation rather than a hard rebound.  But we’ll see what happens.  There are some pretty interesting signs that we’re in for a downward correction.  But we’ll only trade it when we see the patterns emerge. 

Finally, note that RIMM (the folks who make Blackberrys) are announcing earnings this Thursday after the market closes.  The main earnings season starts in mid July and if the markets haven’t turned down by then, that will be a time we’ll be monitoring very closely. 

All the best

Guy