EminiForecaster Blog and Update History

Accurate Stock Market Forecasts for the Emini SP and other Futures

Archive for March, 2009

Sunday Forecast

The EminiForecaster official forecast for the trading week ending April 3rd
is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast from Thursday’s tentative forecast
and we expect a decline into Wednesday or Thursday followed from a rise
from there.

In the absence of massive manipulations in the market this week, we did
see the market following the forecast.  We did get some strong downside
followed by a quick recovery on Wednesday resulting from very little demand
for US government treasuries. Perhaps the greatest debtor in the world is
losing popularity?  Watch for the beginning of an inflationary environment
as the government tries to stimulate the purchase of its debt.  Rising
inflation and pricing may stimulate the stock market due to the increase in
profit margins.

Daily ranges remain in the 22 S&P point area.  This week we did see an
increase on the bullishness of the Overall Market Rating, so perhaps things
are beginning to turn to the bullish.  I will keep you posted if it
actually does go bullish.  For now though it is still giving a bear
reading.  The September ES contract is still trading at a discount to the
June contract. This is bearish, however, the spread may be narrowing.

Key levels to the upside are the 830-835 area.  Above this, we see the 869
area as significant.  To the downside, we are seeing 788.  Below that is a
zone corresponding to  the 764 – 769 area.  I will post the more inside of
the two numbers where the key level is a range.

I have noticed the government may be timing their stimulations of the
market, so I do not expect a lot of downside on this next cycle.  I
believe/suspect this is a highly manipulated market.  Use caution.

Wishing you the very best,

Rob, Vadim & Staff

EMF Tentative Forecast for 20090326

The EminiForecaster tentative forecast for the trading week ending April 3rd is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php (click next week)

We expect the market to decline into Wednesday PM to Thursday AM area and then rise from there.

The cycle is showing a flat area around the 2nd to the 4th, so there is some ambiguity in that part of the cycle.

Option pricing are still skewed to a short market, but may be tipping towards bullish slightly. We will see as it forms up in the coming week or so. A case for more upside can certainly be made. As I previously mentioned, there is a good probability we are seeing an overall up cycle for a number of weeks (on the next scale up from the one we trade).

For the time being, key levels to the upside are 835 area. To the downside 788 and 765.

I will update as needed again on Sunday.

Wishing you the very best,

Rob Vadim & Staff

Sunday Forecast

The EMF official forecast for the trading week ending March 27th is now
posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast.

Key levels are 739 and 747 to the down side.  800 and 825 to the upside.

Contrary to the forecast, a case could certainly be made for some downside
this week, particularly after the Fed induced instabilities introduced last
Wednesday. Use caution.  The historical volatility readings suggest the
market is poised for some upside, however, the Overall market rating
remains (quite) bearish.  Be cautious in this potentially transitional
market environment.  If you are initiating new trades, it might be a good
idea to keep risk fairly tight and to look for some confirmation before
entering trades.

Wishing you all the best,

Rob, Vadim & EMF Staff

EMF Tentative Forecast 20090319

The EminiForecaster tentative forecast for the trading week ending March
27th is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

We expect the market to be up next week all week, from about Tuesday
through Friday.

The current forecast did well for the first two days of this week and then
the Federal Reserve announced they would create $1.2 trillion in new money.
 This shocked the markets, sending it higher, at least for the day
(Wednesday).

The Overall Market Rating (OMR) remains bearish, so it is not likely that
a rally can sustain. However, there is no doubt, the bulls have finally
regained some control (at least for now).  Use caution while the market
returns back to a more un-manipulated state.  This whipsaw action has also
thrown our intraday alerts for a loop.  In past updates, I have written
about this; where the market abruptly changes direction from a strong move
on the previous day against us.  Hopefully we are returning to a normal
market. Average and median daily ranges are in the 25-26 point range on the
S&P and have remained there for most of the year.

I usually don’t discuss such things, because it is not fully relevant to
the shorter term weekly forecasting we do on this site, but here are some
thoughts working in the back of my mind:  I have looked at some of the
longer term cycles and there is reason to believe there is a low in place
and that the market will not be returning to the lows seen earlier in the
year for at least two to three months.  This is in contrast to other
measures that oppose this idea such as the OMR.  As a result, we may see
the market in a trading range that will develop in the coming weeks.  This
change in cycling can wreak havoc on our cycles sometimes, so I urge
further caution in this respect. Last year, about this date, we had a
condition where the cycles had been running quite well, as they have done
so far this year. Then, suddenly they shifted for a time.  I did a lot of
work to try to determine what was driving this force, and I was never able
to fully identify the cause.  Not that this will happen this year, though
it always lingers in the back of my mind.  I will let you know if I think
we are off base.  As for now, please just use caution while the market
calms down from these very massive financial and political abnormalities we
are seeing.

Key levels are 800 and 820 on the upside and 730 and 745 areas to the
downside.

More as needed on Sunday.

Wishing you the very best,

Vadim, Rob & Staff

Sunday Forecast

The EminiForecaster official update for the trading week ending March 20th
is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There is no change to the forecast from Thursday’s tentative forecast.

We expect the market to decline into Thursday and then climb from there.

This last week the market rallied on Thursday and Friday contrary to the
forecast.  I suspect this is based, as previously mentioned, on some
changes in accounting rules.  Citigroup rallied a grand whopping 75% (plus
or minus) due to this, from $1.03 to $1.78.  Can a rally based on changes
in accounting rules sustain?  I don’t think so, unless we are seeing some
more fundamental changes.  AIG is dishing out huge bonuses after having
received massive bail-outs.  Of course all that will probably trickle down
to the small guy and stimulate the economy into recovery (not). We live in
interesting times.

The overall market Rating remains bearish. Average daily ranges continue
in the 26-27 point range.  Key levels for the coming week are 775 on the
upside.  On the downside 710 and 680.

The EMF morning alerts scored an 80% win rate last week.  I still
recommend, as I have said many times over the last few months, focusing on
the shorts in conjunction with the forecasts and entries base on the alerts
is likely the most fruitful strategy.  Also keep in mind that the daily
high or low occurs in the first 1.5 hours of trading a very high percentage
of the time and that ranges exceeding the average daily range are not good
places to go with the trend.  If you are a new member,  please review past
updates for more on this.

Wishing you the very best in your trading in the coming week and beyond,

Rob, Vadim & Staff

What Kind of a Trader Are You?

“You have to take what the system delivers to you and not decide how you are going to trade the market. Many traders decide, “I am a day trader, or I only trade Dow futures etc. when they may have a perfectly good system in front of them and it would only take a small change in their behavior to accept it, but we repeatedly observe a refusal on the part of traders to make that change- In other words, traders form beliefs that prevent them from seeing or doing what they need to be to be successful-“

It never ceases to amaze me how traders that subscribe to our services categorize what kind of a trader they are and what specific markets they trade without a review of any kinds of facts. Perhaps they read a book that had a leaning towards a particular style of trading or a friend that has told them they had done well trading on a certain time frame or in a particular market. The point is, traders do make choices about how they trade. Often traders are not even aware of the implications of the choices they have made, or in many cases, they are not even aware they have even made a choice from a range of possible choices. One makes choices based on their goals or interests. For this reason, it is very important that you decide what you are in the game for, right out of the gate.

Here are some choices traders make in this regard:

To make money
For fun and excitement
To fulfill a secret desire to lose or fail (that is not a joke)

Trading is a very difficult game. You must know what you are doing to succeed. This is true because more often than not, you are losing if you are not winning. This makes it unlike most other businesses where you have a fixed cost, but do not generally lose if you do not have business in the moment.

What kind of trader you are ties directly to your goals. For example, if you want to make money, you may be inclined to take winning more seriously than a trader who trades for fun. The person who trades for fun, may rationalize to himself, it is alright to lose. He may be inclined to not manage his risk so tightly. The trader who comes to the game to make money, will also be more willing to adapt his style to what works, rather than trying to force himself into a mold like, “I only trade Russell futures”, or, “I only day-trade.” For this reason, the trader who comes to the game wanting to make money has a psychological advantage in that he is more willing to alter his behavior in order to achieve success. This trader profile has another advantage. He still gets to have fun and to deal with the incredible challenge trading brings. Of the four types of traders above, this trader, whether he is aware of it, is a winner.

A trader, who trades for fun and excitement, is most likely a very short term player who thinks of himself as a scalper, or day trader. This is where all the action is. This market participant trades very frequently and at various points through the session. This trader’s paradigm for trading puts the excitement before the profitability and business concern for lowering costs and maximizing return. This choice, as we mentioned, may or may not be conscious. This trader may tend to have a smaller account, and a natural concern for trying to keep what he perceives as risk minimized. He may not be aware of other choices available to him. It is natural for this trader to need to think this way, since he is forced to by the structure of the market. This implicit “forced” choice may be a huge disadvantage for him, as he may be taken out of his positions by small stops on “would be” winners and may spend excessive amounts on commissions and slippage when compared to a longer term player.

This is not to say it is not possible to be successful as a short term player. In fact there are entire firms set up around this kind of activity. They are well capitalized. These firms have excellent execution capability, information and can execute at little or no cost. Firms doing this can be highly profitable. The small trader does not have this kind of information or capability. We believe less than 1% of day-traders or scalpers can outperform longer term players in the long run.

By having the need to get a rush out of trading, one is in a worse psychological position than the person who does not care so much, or is trading longer term. The trader in this profile has made choices that work to his disadvantage. When combined with the idea described above, where you tend to be losing when you would otherwise be winning, it makes for a losing proposition in most cases. This is why we suggest small accounts use options to control risk. It gives the rush potential of having huge percentage winners when they happen, without risking the whole account.

Some traders come to trading with a hidden desire to defeat themselves. They beat themselves down when they trade. They most often do not have a plan. Then, they have a. “see, I told you so” attitude when they lose. Always remember the saying, “be careful what you wish for, you just might get it.” This trader is actually extremely successful, because he gets exactly what he asks for. This occurs even when he has an amazing trading system to work from. We could praise him for it, but he would not think it was very funny. If you find yourself in this mode, simply reverse your thinking. You will be amazed what will happen.

All of these trader types need to be conscious of their choices. In fact all of us have each of these tendencies welling up from inside us. We need to be aware of the behaviors, and the paradigm behind them, so we can identify when we are going astray. We all want to trade, make money and have fun. Slight variations in these categories and the way we think about them can result in a huge difference in the result we get.

Ideally, the successful trader wants to make money as a number one goal. He wants, and needs to have fun doing it. He needs to be aware of behaviors that sabotage his efforts. He needs to be aware of choices that are available to him and their implications. He needs to manage his risk, his cost, and be capitalized properly to succeed, or trade using instruments that make all these things line up in his favor.

EMF Tentative Update 20090312

The EMF tentative forecast for the trading week ending March 20th is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

We expect the market to decline into the Thursday PM / Friday open area and then climb from there.

The last couple days we have seen some stronger than expected upside which was possibly due to the optimism surrounding changes in bank accounting procedures. It is not expected that such optimism should be lasting, since there is nothing substantive about it. Our Overall market Rating remains bearish and we are at multiday highs.

Key levels to the downside are the 700 and 710 areas. To the upside 770 and 792 are key.

We will have more for you on Sunday.

Wishing you the very best,

Rob Vadim & Staff

The EminiForecaster official forecast for the trading week ending March 13th is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast. As previously mentioned, the up cycles are still not getting their lift due to the continuing deterioration and bad news in this market environment. Shorts are likely going to be your safest place to be going forward, though be cautious of quick rallies (as in the last hour or so on Friday).  Selling 3 day highs that manage to time with the forecast and alerts may be prudent. Currently, that is the 723 to 732 area, but will shift lower to the 700 to 710 area after Monday.  Going through this level with volume and on a closing basis may signal a bear rally. I will leave the key levels as posted Thursday, however you may want to keep these other levels in mind.

These are not normal markets.  Manage your risk as a first priority.

Wishing you the very best,

Rob, Vadim & Staff

Thursday Forecast

The EminiForecaster.com tentative forecast for the trading week ending
March 13th is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

We expect the market to climb into the 10 close to 11th open area and then
decline.

The market has been having difficulty making headway on the up cycles as
we previously mentioned and seems to have more traction on the down cycles
consistent with the forecasting.  As previously mentioned the Overall
Market Ranking remains bearish, so this is as expected.  I trade for a fund
and have returned somewhere in the neighborhood of 40% year to date using
the exact recommendations I have provided for you.  Because it is a
multi-manager fund (7 traders), I have taken the longs as well, but, as I
have said, due to the OMR, this is not a good strategy for an undiversified
account.

Another manager last night told me the market was going higher; a trader
who has very close to 100% winning trades in his short term trading.  I
told him we were at a 3 day high, as I have pointed out to you in these
updates, and you saw the bloodbath today after the market hit that level
yesterday.  There is good reason to believe this strategy remains viable in
the expected conditions going forward.

The volatility is on the rise again with the average range being in the 27
S&P point area.

We are standing at multi year lows as I write this that go back to
September of 1996.  I remember those days well and I never imagined we’d
come to visit these levels again.  I attended a money manager conference
this week and was amazed at some of the forecasts of some of these active
traders; some of them willing to call the Dow as going as low as the 2000
area.  I am not quite that pessimistic, but I figure we go lower.  I have
been off in my forecasting of lows, simply because my method doesn’t
typically look back 12 years to find support or resistance.   Combined with
the fact the levels are a week out, it makes it difficult.  Last week I
told you 700 and we managed to break that by a good margin.  This week, I
am thinking 650 and 600 as key levels for the down side.  To the upside,
the 800 and 825 levels.  I will update these as needed on Sunday based on
tomorrows action.

We have some important reports tomorrow morning that could impact the
market. Keep an eye on developments that could drive a rally-  A bear
market rally could come fierce and fast, so protect yourself.  The first
signs will likely be solidly breaking a 3 day high on a closing basis with
a follow through day after that.

Wishing you all the best!

Rob, Vadim & Staff

Sunday Forecast

The EminiForecaster official forecast for the trading week ending March 6th
is now posted.

http://eminiforecaster.com/members/membersblog/forecaster.php

There are no changes to the forecast from the tentative forecast. We
expect the market to decline into mid week and rise from there.

As previously mentioned, the up cycles are being challenged by the strong
bear market trend we are seeing.  This is confirmed by the Overall Market
Rating which continues to be bearish. Selling 2-3 day highs has been and
will likely continue to be a good strategy.  Be cautious however, of
violent upward rallies driven by news ot governmental factors.

We are currently testing the lows from 1997 on the cash S&P index.  The
1996 low stands at just below the 600 area.  Testing the 700 area is not
unlikely in the near term.  Key areas for the coming week are 700 on the
down side. To the upside the 750 and 780 areas are key.

We wish you the very best in your trading in the coming week!

Rob, Vadim & Staff