There are no dress rehearsals in futures and options trading. No magic bottles to rub (wish there was) so a beautiful genie will pop out and ask your wish. As much as we may want to make millions of dollars trading, we know it’s not going to be easy.
The way it can come is by believing in yourself and working over time. If you were not born with a silver spoon in your mouth and you survived the credit crisis, you’re doing pretty well. As MrTopStep grows, we don’t want to lose sight of our mission: say it like it is and bring talented traders and educators to the forefront.
I know I could pick up someone like Dennis Gartman on my first call, but that’s not what MrTopStep is about. We enjoy his writing and wish him well, but MrTopStep is about finding the most talented smaller professional traders and services and introducing them to our members.
Our mission is teaching our followers the trading rules we have developed and learned in our combined half century on the trading floor. We believe in the power of community and what we call social trading. Having learned from our carefully selected’ faculty of professional trader-educators, it’s then up to you to decide what fits your style of trading.
It’s similar to what Marty “The Pit Bull” Schwartz taught me when we first met. He asked me, “Do you follow the winners?” I do, and that has been the key to my success. If you want to find and follow the winners, many of them are right here, on this website and in MrTopStep’s online trading room.
The Asian markets closed up except for the Mumbai Sensex 30 and Europe is mostly up as of 7 AM CT. The big show today is the jobs numbers this morning. While some upped their non-farm payroll forecasts, we are sticking to the 185,000 to 190,000 job’ consensus. And while we did call the run to S&P 1700+ this week, we also know there are more buy stops to run. That leads us to MrTopStep’s Trading Rule “Counter Trend Friday.” This is one of MrTopStep’s most important trading rules and works best on a jobs Friday.
From the soon-to-be-released ebook, MrTopStep’s Trading Rules, Counter Trend Friday:
This trade works best on unemployment report Fridays when the S&P futures gap way up or down. You see oversized, pre-market GLOBEX volumes of 400k to 600k ES traded before the 8:30 open. This is what is called a “bus-too-full” trade (pg. 12).
Example: The S&P is down 6 handles at 06:00CT and then down another 8 or more handles after the jobs number is released. Now, the S&P is down 14 handles or more on the 08:30CT open. With over 400k eminis traded before the official open, we know that traders have already voted. Depending on the price action the tactic is to buy a sharply lower open or wait for another 2-5 handle drop just after the open.
You will often see that the opening range has already been predicted by the electronic market. Since it is Friday, most traders can’t hold the futures over the weekend. So they put in buy stops. With all the selling used up before the open, the ES will start to short cover into the buy stops that have been programmed already.
This will lift the offer (buy) side and may present a new buying opportunity. As always, timing is paramount. Just knowing why a move might be happening is not enough (unless you’re just a commentator). Traders have to plan their entry and, most importantly, have an exit strategy that they stick to.
The Counter Trend Friday call is just a day trade and is not a directional call. Our overall view remains that prices will go higher. We know that the higher we go, the higher the tendency for another selloff or pullback. At the same time, we also know the answer to the question, Can stocks go higher as bonds fall? That is a resounding YES. I have been saying it for weeks. That said, expect a two-way tug-of-war today. And don’t forget about the Friday Effect.
As always, pay attention to the 10-handle rule and please use stops when trading futures.
It’s 7 a.m. and the ESU is trading 1702.25, up 2 handles; crude is down 35 cents at 107.54; and the euro is down10 pips at 1.3206.
In Asia, 10 of 11 markets closed higher: Shanghai Comp. up 0.02%, Hang Seng up 0.46%, Nikkei up 3.29%.
In Europe 8 of 12 markets are trading higher: DAX up 0.07%, FTSE down 0.11%.
Today’s headline: “Bonds Fall Ahead Of Employment Report”
Total volume: 1.5mil ESU and 6.1k SPU traded
Economic calendar: Employment Situation 8:30 AM ET; Personal Income and Outlays 8:30 AM ET; Factory Orders 10:00 AM ET; James Bullard speaks about the economy in Boston 12:15 PM ET
Fair value: S&P 1702.02; NASDAQ 3119.55
MrTopStep Closing Print Video: http://mrtopstep.com/2013/08/mrtopstep-closing-print-video-08-01-2013/