If you’re nervous about the market … you’re not alone. A lot of traders are nervous this week.

Why?

It could be because this week is the 20th anniversary of BLACK MONDAY, the crash of ‘87.

Many readers may be too young to remember the biggest single day drop in the history of the Dow Jones Industrial Average. On the 19th of October 1987 the Dow dropped a jaw dropping 23% in one day. It looked like the end of the world!

Can it happen again?

That’s the question BARRONS posed on the front page of its weekly newspaper.

In a traders’ poll conducted at MarketClub the vote is “Yes it can.”

Here is a new video to show how you can protect yourself no matter what happens to the market.

You can watch it here. No registration required.

Be prepared this could be the most dangerous week of the year.

Every professional trader I’ve seen day trading the stock market for a living watches the SP futures charts and/or the Nasdaq futures. They do it for one specific reason and that is that Stocks lag behind the futures markets.

Stocks that track with the market indices make their moves a little bit after the futures markets move. It may be a few seconds, or only a fraction of a second, but it’s an exploitable edge that experienced traders use in their stock trading strategies.

That’s primarily why traders who are day trading the stock market subscribe to TradeStalker’s RBI Trader’s Updates. They want to know where the turns and stalls are most likely to happen on the Futures charts, so they can time their entries and exits on the stocks they’re trading.

For example, if a guy day trading the stock market holds a long position in a good tracking stock and it’s going up nicely, but he sees the SP futures jump up to a resistance zone and stall, he’s going to exit that long position, or at least part of it, before the market turns around and clips his gains.

And a break-out stock trader is going to watch the futures market, looking for a futures break out that leads the stock he’s trading.

Of course, stock traders have the disadvantage of the up-tick rule when they want to short. That’s one reason many of us prefer day trading futures rather than stocks.

But take a look at these charts below and you’ll see why day trading the stock market with the RBI support and resistance levels on the SP futures really makes sense…

The chart on top shows the SP eminis from Friday, 8/12/05 with an RBI support / resistance level at 1236.00 (blue line) that I calculated and published to my subscribers the night before.

The bottom chart shows IBM’s one-minute chart, bar for bar, straight below it.

First take a look at the top (the big circle) on the top chart where the ES futures poke through the RBI s/r level at 1236.00 and get quickly rejected. This is a sign of weakness in the overall market. You would be hoping for another push to that same s/r level so you could short the eminis.

Now look at the second bar after the top (in the big circle) on the ES chart.

Compare that to the same candle on the IBM chart (in the big circle).

If you were trying to day trade IBM without the ES futures (and my RBI s/r levels), it looks like the pullback at that second bar is weak…

Say you’re holding IBM long. It looks like it will go higher. You would probably stick with the trade and get clobbered in the next down bar, but if you watch the futures with my support and resistance levels, you know the next bar is going to be a long fast down move. So you get out to protect your gains. Or if you’re flat , you might try to short IBM on that second bar in the big circle.

And look at that nice pullback right up to RBI resistance and the quick rejection. That gives you a high probability that the market trend is going down. So when IBM makes those two quick moves back up to the right side of the circle, one look at that area on the futures chart lets you know what’s going to happen. The futures are going to lead IBM down. Time to hold short, or get out of a long position.

Are you day trading the stock market? Without a doubt, the stock trading strategies that the experienced traders use are based on the stock index futures.

Learn day trading from Mike Reed , a 24 year experienced trader. These are the most effective futures support and resistance zones available, and you’ll get them in your email box every evening so that you can plan your trading strategy for the next trading day.

Technorati Tags: day trading the stock market for a living, day trading

On Friday, (Oct. 12) EWI’s Short Term Update made a simple, yet cautious forecast about the main U.S. stock indexes:

“The pattern will maintain its integrity… so long as yesterday’s highs are not breached.”

That prediction was part of a larger discussion of what STU called the “Topping Puzzle.” And today’s (Oct. 15) decline in the markets was an important piece that fit right into that puzzle: “The push to last week’s 14,198.10 high still culminated in an ending diagonal pattern and prices have turned down from this high.” So, what does that ending diagonal mean for the markets in the short term? Learn more about the Short Term Update here.

Author Ian Sayer, 61, has been tracking down stolen Nazi gold and war criminals for the past 30 years. Along the way, he has acquired some valuable second world war documents and signatures.

Futures ALERT is a MarketClub related advisory service that made 16 total trades in September. Here are the results:

$16,623.50 profits
$2,666.50 losses

NET: $16,357.00

Oct Results:
$6762.50 profit (Stopped out of Copper for a $6762.50 profit) $0.00 losses

6 Open trades that can STILL be profitable. Agricultural, metals, futures options, currencies, hards, and softs are ALL covered.

Here’s what other Futures ALERT members are saying…

Futures ALERT has helped me understand how to trade and why to trade some markets vs others. After 6 months of following the recommendations I’m up over 35,000 in my futures account…and so far I’m already in the money on the October trades…THANKS!
–Steve R. New Hampshire

Using the service I’ve been able to pin point my entries and exits to stay profitable. I’ve been a member for just over a year with no end in sight.
–Diane P. Alberta CA.

Take a 30 day trial here and track the trades to see if Futures ALERT is all it’s cracked up to be!

This chart exemplifies the technique we teach in our ebook Hurst Cycle Trading Without the Rocket Math. We loaded daily data into the training software, ran the cycle finder, multiplied the shortest cycle by 10 and the chart was done. The price projection was made with the “E” tool which we explain in the ebook. The Hurst cycle trading technique can be as easily applied in almost every commercial trading platform or in Excel.

A few days ago we ran a chart demonstrating a technique from our Fibonacci ebook, also with the EURO.

Technorati Tags: Hurst cycle trading technique

Ken McRae, 66, has become an expert on Dinky toys since he  began collecting them in earnest in the 1980s. The retired army officer owns some 2,500 models, with the most valuable item, a pre-war gift set of six saloon cars, worth up to £8,500.

Gold, Crude Oil, the Dollar Index … how did MarketClub do in Q3?

Last quarter was by most accounts one of the most volatile on record.

The DOW hit record highs and then plunges 10% in just 21 days. Crude oil soars to over $84.00 a barrel and Gold trades at levels it hasn’t seen in a quarter century.

Inflation, the credit crunch, the sub-prime disaster, record high prices for oil and if that was not enough, the fed cuts 50 basis points!!! All of these amazing events were all part of the trading fabric that made up the third quarter.

Looking back over the quarter one word best describes the markets …volatility!

O.K. so how did the new “Trade Triangle” approach do trading Gold, Crude Oil, and the Dollar Index?

All the buy and sell signals were generated using MarketClub’s “Trade Triangle” technology. The results are all positive for each market and show just how well you can do when you filter your trades using MarketClub’s triangle methodology.

Having a proven approach and a solid game plan to trade with gives MarketClub members a tremendous advantage over other traders and investors.

Here’s the new 10 minute video.

The video shows you step by step, signal by signal and illustrates how well you can do in the most difficult quarter in 12 years.

Click on the graphic to go to the MarketClub free video lessons page.

By Vadim Pokhlebkin
9/25/2007 9:24:24 PM
Elliott Wave International

“Today, the euro hit another new all-time high against the U.S. dollar.”

If this is starting to sound as routine as another report of a Baghdad car bombing, get used to it. Or, at least, that’s the consensus out there: The euro’s Daily Sentiment Index, a popular measure of forex traders’ expectations, is at 92%. Only 8% of traders expect the dollar to get stronger from here.

Why? Simple. Blame the “mounting fears over the health of the US economy, exacerbated by the housing crisis and the subsequent interest rate cut by the US Federal Reserve last week.” (The EU Observer)

It sounds like a perfectly good explanation. Until you think about it, that is – because there is one part that just doesn’t fit. Remember last month, when global financial markets – starting with the DJIA – were all but crashing? Right then, the dollar saw a surprising appreciation against the euro. Yes, in the midst of an unfolding U.S. subprime mortgage crisis – a severe economic threat – the buck rebounded. If “bad fundamentals” are really driving the dollar’s trends, how could that “worldwide rush for dollars” have taken place? (Bloomberg).

Well, it did. And the real explanation here, I think, is not in the dollar’s “fundamentals.” Because the world’s perception of the dollar as a safe-haven currency is not a rational, calculated assessment. It’s an emotional one. How else do you explain last month’s rebound, despite real prospects of a U.S. recession (or worse)?

Of course, if you accept this point of view, you must also concede that the dollar’s latest slide to new lows has also had a lot more to do with emotions than reason. And you know as well as I do that the minute the USD gets stronger, analysts will come out of the woodworks explaining how positive, in fact, the Fed’s recent interest rate cut was for the dollar – because see, lower interest rates help boost the U.S. economy in the long run. Spin it, baby.

Elliott wave traders say that probably the one thing they appreciate the most about the method is its objectivity. Unlike the Fed’s interest rate policy, the same Elliott wave pattern can never be bullish AND bearish at once. That rids your trading of an enormous amount of clutter. For example, take a look a this chart from EWI’s Currency Specialty Service daily analysis of the euro/dollar (published Sept. 25):

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Tradingfives, Oct 2, 2007

The chart on the right is a price projection of the Focuser Tool from our Fibonacci training software. The price projection of where to look for resistance was made more than one month ago and may be right on target. That the Focuser is consistent with Elliott Wave results is very often significant.