Strategy Based Trading - BULL TREND CORRECTION

Today and the rest of the week I'm going to continue to focus on MKTs that are in a BULL TREND CORRECTION technical state. A MKT in this position has an underlying positive trend but has produced a negative signal against that trend. This is a dynamic technical state with opportunity on both sides of the trade equation.

By developing a strategy to trade this state and apply only in MKTs that are producing negative signals against a positive trend or a BULL TREND CORRECTION, you not only improve your chances of a successful trade but also have a more satisfying trade experience as your strategy is align with your expectation.

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* Practical Application review for Sep 21,2009 BULL TREND CORRECTION MKTs click here http://www.jsservices.com/recaps/JSSReviewUTC92109.wmv

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For today, September 22 2009 - The following MKTs are in a BULL TREND CORRECTIVE state:
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SP = SP500 Index Dec'09 - 1069.25 Inflection Pivot
EMD = Mid Cap400 Index Dec'09 - 694.80 Inflection Pivot
EX = EUROSTOXX Dec'09 - 2870.0 Inflection Pivot
EU = EUROFX Dec'09 - 14695 Inflection Pivot
CD = Canadian$ Dec'09 - 9311 Inflection Pivot
ED1 = EURODOLLAR Dec'09 - 9951.5 Inflection Pivot
CC = Cocoa Z'09 - 3119 Inflection Pivot

SP500 Z'09 - At the time of this blog the Index is trading below its 1069.25 Inflection Pivot. The negative corrective sell signal will dominate MKT behavior below here. Below 1069.25 the 500 is vulnerable to further corrective action. A rise above 1069.25 and the underlying BULL TREND will try to make up for lost time and a strong advance should be expected.

EUROSTOXX Z'09 - The MKT settled just below the 2870 Inflection Pivot. Expect a dynamic trade around this price point. If the BULL TREND CORRECTION is going to continue lower the Index will not do much if any trading above 2870. If so the BULL TREND will try to re-establish itself. A held trade under 2870 and yesterday's lows are in jeopardy.

Mid Cap400 z'09 - The Mid Cap 400 Z'09 contract is currently above its 694.80 Inflection Pivot. If the BULL TREND is going to remain in effect the index will build a base above this price point for a fresh advance. A held break under 694.80 is needed to confirm the negative signal and further losses.

EUROFX Z'09 - The currency had a negative corrective signal but remains in a solid state above the 14695 Inflection Pivot. This is the low point for any weakness today if the underlying positive trend is going to remain unaltered. A break under this price point and yesterday's lows are in jeopardy.

Canadian$ Z'09 - The Canadian Dollar is also trading above its Inflection Pivot at 9311 after a negative corrective signal. Keep a positive outlook above this price point expecting a resurgence of the positive momentum. Only under 9311 does sentiment align with the negative technical signal for a new move lower.

EURODOLLAR Z'09 - The front month EURODOLLAR Z'09 is on its 9951.50 Inflection Pivot. Its "Hold or Fold" for this MKT. Continue the corrective trade or return to the BULL TREND.

COCOA Z'09 -The MKT remains vulnerable to further corrective action below the 3119 Inflection Pivot. Keep all signal acceptance in line expecting further losses below here. Only above this price point is the signal negated and the buyers back for another charge.

The MKTs presented are "technically" in play, in a BULL TREND CORRECTIVE state, providing opportunity of both sides of the MKT. In this trend position it is more likely that the MKT is going to move than not. Typical scenarios are either 1. Downside follow through on the negative signal, 2. Positive reversal and resumption of the underlying Bull Trend or 3. Sideways neutral digest. By using the Inflection Pivot as a sentiment guide, [Bull Trend resumption above, Negative Correction Below] you can optimize your strategy performance and capitalize on this technical signal state.

JS


Strategy Based Trading is a methodology that focuses on the applied strategy verses a specific market and looks to align strategies with markets whose current technical behavior matches the strategies criteria. Please review the following CME sponsored tutorial for a complete overview of this approach.

STRATEGY BASED TRADING Review
http://progressive.powerstream.net/008/00102/edu/interactive/js_services/strategy_based_trading/index.html


For more information please contact me at info@jsservices.com. You can also visit http://www.jsservices.com/.The Inflection Pivot levels are available as a chart overlay on the following platforms; Ninja trader, Strategy Runner and eSignal. Sign up for a Complimentary FREE Trial.