TradeStalker’s R.B.I. Trader’s Update

7 / 13 / 2009

(Published Since 1996)

The market opened higher on Monday, but the move was sold and gathered steam when 880 on the ES was cut through. The drop took the ES to 871.25, just under the 872.50-872.00 support, then reversed back to the upside. The ES got over the 880 level, and then held it on a pullback, and then the ES shot up to 891.25. The move stalled, but the pullback held above the 888.00 level and went trend-up until stocks closed. The futures backed off and settled under fair value.

We get the PPI and Retail Sales before the open on Tuesday. It’s also earnings release time for the market. The averages are in short term uptrends that have had a good tone for the past couple of trading days. However, with Monday being a trend day and with my RBI oscillator reaching sell territory, the market should have some trouble making much progress on the upside. Odds would be better for some two-sided trading on Tuesday. At the moment, the market looks like it will be in decent shape unless the 891.50-890.75 area on the ES is broken and not quickly reversed. If that area is broken and the market doesn’t snap right back, then the trends could roll back over to the downside.

On Tuesday look to get short if there is early strength and the move fizzles/reverses from the initial resistance areas. If that plays out and a pullback can hold the initial support areas, then that should set up a trade on the long side. If the volatility picks up, then beware if there is a sizable move in either direction, as the move likely will reverse and retrace 1/3 or more of the prior run up or selloff.

Good Trading,

Mike Reed
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