Futures Point to a Slightly Higher Open...STX Up on Heavy Volume...

BMO – ES +3.50 and NQ +9.50 futures slightly higher about 20 minutes before the open in pre-market trading and point to a higher open…

TLT is down 88 cents and the Euro is up 4 pips in premarket trading and is above horizontal resistance …

NDX leaders AAPL, PCLN and NFLX are higher in pre-market trading…AMZN and BIDU are flat…GOOG is lower…

Look at STX which is higher on heavy volume in pre-market trading…

Dave’s Insight for Monday: The broad market is in short term consolidation until it breaks out of either resistance or support.  Continue to follow your rules, look for breakout, support bounce and divergence entries and enter when you see the signal…

SPX

Resistance: 1,330, 1,344, 1,362

Support: 1,321, 1,311, 1,300

Quoting Down – CIEN, CRM, VMW, TLT, NETL, CMG, AGU, DECK, UNP, A, RVBD, UAL, GOOG, CHRW, CTSH, WYNN, APOL, AMZN

Quoting Up – WLT, MCP, VECO, UCO, NFLX, PCLN, STX, URBN, TIF, SLW, NDAQ, TBT, GS, ATI, PCX, CLF, FWLT, NYX, JNPR, SBUX, ISRG, VOD, QCOM, FSLR, AKAM

I reported in the Tuesday post that at my AT Workshop on Tuesday, we placed a counter-trend virtual trade on the SPY buying 50 contracts of the March quarterly 132 put on a conditional entry at 131.88.  The order filled at 11:25:02 at 2.83 per contract.  The closing price was 3.625 mark for a ROI of $3,975 or +29%.

On Tuesday shortly before the close and before we were aware of the day’s ending profit, I told the class that we would move the stop to at least breakeven, thereby taking the principal risk off the table.  That evening after evaluating the profit I determined that on a low probability counter trend trade the stop should be moved to half the profit. 

On Wednesday morning I moved the stop on 49 contracts from a conditional order on the stock to a stop order on the option price at 3.23 or 40 cents per contract.  The reason I did not move the stop on 1 contract was in case the options got stopped out before class started on Wednesday, I wanted to be able to show everyone how to change the stop from a conditional order on the stock to a stop on the option price.

At 7:51:29 am MT the stop order was triggered at 3.23 and filled at 3.22 on 49 contracts.  Later on Wednesday I showed the class how to change the stop and the 1 contract was filled at 3.01.  The total real time virtual gain generated was $1,929 or 13.6% from Tuesday to Wednesday on this counter trend trade.  I also reviewed the results from this virtual trade in Thursday night’s AT Trading Room.

The trade management here was right because SPY did not follow through to the downside and finished higher on Wednesday and Thursday sending the 132 Mar quarterly significantly under the cost basis on Tuesday.

If you have an interest in learning how to counter trend trade right, send me an email at chartsignals@yahoo.com.