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MUTUAL FUND MONDAY
Over many years of watching we have concluded that the Mutual Funds use Mondays as a favored buy day. In 2010 there were several consecutive Mondays that the markets closed higher. Part pf that rule is you buy on Friday and hold into Monday.
TURN AROUND TUESDAY
Tuesdays are also part of the early strength The thought process is that the markets tend to rally early in the week and early in the day even during bear markets.
ACTIVE MONTHS
The BEST 6 month period for stocks begins in Nov and going until APR
10 HANDLE RULE
Over many year of watching the S&P we believe that tt ended to move in 10 handle increments. If the S&P futures open at 1120, rally to 1122 the 10 handle rule goes into effect at the 1102 level. If the S&P fails at 1102 the 10 handle rule then goes into effect at the 1092 level. This depends on the level of program trading but at each 10 handle move there tend to be a bounce or even a low made close to the level. This works in reveres on the up side.
COUNTER TREND FRIDAY
Because Friday are the last trading day off the week we have a term for it and its called Counter Trend Friday” This happens best when the S&P futures gap way up or way down on a Friday with pre 8:30 GLOBEX volumes of 300-400k ESs traded before the 8:30 open. Again this is a fade the bus trade. Example: The S&P is down 4 handles at 6:00 am CT and then down 6 or even 8 more handles after a 7:30 economic release. With the S&P down 10-12 handles on the 8:30 open with 400k ESs trade tells us everyone already voted. Our call is to buy that sharply lower open or the first 2-5 handle drop just after the open. The idea behind this is that with that many ES (minis) traded everyone already sold it. It being a Friday and knowing people can’t hold most of those futures they put in buy stops. Once the markets start to short cover the buy stops start getting hit out and that buying elects the offers that market up what’s called index arb or program trading.
THE THURSDAY / FRIDAY BUY THE WEEK BEFORE EXPIRATION
This is a PIT BULL trading rule. How it work is that the S&P tends to make a low the Thursday or Friday the week before expiration. Look to but weakness on Thursday or Friday looking for a low and hold into Monday or even into the expiration its self. In most cases the trade is again to buy on Friday and hold into Monday.
BUS TOO FULL
This is a street guys term for when the markets are over bought or over sold. When everyone is BEARISH and the markets are going to crash and we are looking for buying opportunities we sometimes use the “BUS IS TOO FULL” over the term over sold or over bought for that matter as the bus goes to extremes in both directions
EVERYONE IS TOO LONG or TOO SHORT
When we are searching for day trades we often use the term “everyone’s long into the rally” This generally means we think the markets are near a high or a short term top. This would be where we would offer futures for a short sale scalp. This works both way but the best example of how this works is the S&P sells off 6 handles and the locals and small paper get short. Once the S&P short cover and everyone get knocked out and goes long into the rally that’s when we come out saying everyones gone from short into the decline to long into the rally, that a minor selling opportunity but has also lead to some big highs and lows
NO STOP GO UNTOUCHED IN THE S&P
Over the years both in the open out cry and electronic there has always been a tendency to “run the stops” Most of the time these stops are people getting taken out of the markets with a loss. If they are luck it’s a profit but the one we are talking about are generally the on the loosing side. How this works is retail traders tend to use 3-5 handle stops and when the markets are moving they trail the stops up and down based on where the markets are going. Eventually the S&P will knock out the stops on a daily basis but we are also talking about long tern stops well above and well below the markets.
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