Diversified Trading Institute

Weekly Dollar Index:

The DX opens the week at 84.95. First resistance should be at 85.36, and then 85.47, and 86.00. Also look at weekly highs at 87.695 and 88.905. The market could then challenge the 89.71 March 2009 high. Support for the DX should be at the recent weekly lows, 83.07, 81.87, and 80.14. Keep a close eye on the Euro, as it gains strength, bouncing from some lows, that seems to be the primary reason for the DX falling off recent highs.

 

*Past performance is not indicative of future results.  There is a risk of loss in trading.

As we continue to see, the summer months tend to be mini bull and mini bear
rallies instead of demonstrating a clear trending direction. We currently
perceive this as a value area, near the lower end of a mini bear rally.
Yesterday was more than likely a set up day for the upcoming holiday, but
there could still be more of it today. We are approximately 50 points below
the Fed number, however we are not overly bearish due to the support level
in the market. Any time we see this strong of a pullback we expect at least
some retracement.

DTI's framing of the market is as follows:

.         1025-1032: Support Area

.         1115-1117: Resistance Area

This market started down for the year, moved into the mid 1200s and has now
pulled back to the 1030 area. Obviously this is not a time to own a lot of
stocks. Our personal comfort level is no more than ten percent of our
overall portfolio.

From a strategy point of view, it is extremely important to be able to trade
Thursday, Friday, and Monday. Historically, these are three of the most
lucrative days to be a futures trader. Watch the markets in the early
morning these few days and we will be trading heavily as well in the
TradeRoom.

Overall, this market looks bad, but it is not THAT bad. We have several
things working in our favor on the bullish side:

.         The market is just above a strong support area of 1025-1032

.         We are approaching the end of the month/first of the month

.         The July 4th holiday tends to be a turning point for the
           market and often reverses direction

In regards to gold and silver, we are long term bullish. We believe they
will be higher by the end of 2010. These metals have a bad tendency of
taking huge dives when moving downward, however, so we do not recommend
taking heavy long positions at these prices.

The DTIc software has been great for finding swing trades and high
probability seasonal trends and we will continue to use this tool to find
historically trending stock trades.

Be sure to be around early this Thursday, Friday, and Monday as we look for
some big trades.



Trading futures is risky. Past performance is not indicative of future
results. Understand the RISK before you trade.

The equity markets have reacted to weak economic numbers in China and the United States continues to sell off.  This is a retest of the lows and the market is getting its bigger move in during the first part of the week as expected.  There is still a major employment situation report to deal with Friday morning as well.

The current low of the day on ESU10 is 1037.50 vs. the June 8 low of 1037.00 and the May 25 low just below that at 1032.75.  This is setting up to be a very critical afternoon in the market as we retest these 2 prior swing lows.  The report Friday can also serve as a catalyst for either a major punch thru support to new low levels or a springboard if the market attempts to rally and hold this area once again.  The key factor to focus on is that the market is very weak and investors should maintain defensive positions.

Second Quarter Closing

The second quarter is drawing to a close this week as we head into the July 4th Holiday weekend.  The market finds itself in the middle of the recent range at 1074.75 on ESU10 after a low at 1032.75 and a higher low at 1037 on June 8.  The rally ended on June21 at 1129.50 and has retraced about 2/3 of the rally up from that higher low.

There is the potential for some window painting this week as the quarter ends.  This quarterly open on ES was 1169 so the ES has lost basically 100 points and will obviously close as a down quarter barring a massive rally in the next three days.  We expect the bulk of the move for the week to conclude by Wednesday as the major market participants are likely to begin extended vacations later in the week and the volume can taper off.

There could be some action Friday however as the NFP report or the “Employment situation” is reported before the open.  This is normally a major market moving report and we believe continues to be quite important as an improving jobs situation is important to an improving housing market.  Before Friday there is also Personal Income and Outlays on Monday, Consumer Confidence on Tuesday, and the ISM Manufacturing Index on Thursday.  This could be a big week for economic reports to impact the market.  Also, the close of a quarter means we are near the next round of EPS reports which will begin in July and as always can be expected to move the market.

Notes:  We have taken profits over the past week in VRX and are still holding 1/6 of our original position for a 13.6% gain.  We are watching MA, BIDU, AAPL, GS, FAS, and BA for possible trading opportunities….Retailers are looking weak although TGT and WMT are oversold and could be due for a bounce.


Past performance is not indicative of future results. Futures trading involves risk.

Daily Opinion
 
A break above 1094.00 should allow the market to move up through 1098.00 and 1100.00 before pushing past 1102.00 to challenge 1107.00 and 1110.00. Once past 1110.00, expect the market to challenge the open of the year at 1113.75. Below 1084.00, the market could move down to Wednesday’s low at 1080.25. After moving below that level, the market should challenge 1075.00 and 1069.00 before dropping through 1067.00 to challenge 1062.50, and possibly the big 1056.00 support number.
 

Weekly Dollar Index:

The DX opens the week at

85.67. Look for resistance at

the recent weekly highs at

87.695 and 88.905. The

market could then challenge

the 89.71 March 2009 high.

Support for the DX should

be at the recent weekly lows,

85.325, 83.07, and 81.87.

Keep a close eye on the

Euro, as it gains strength,

bouncing from some lows,

that seems to be the primary

reason for the DX falling off

recent highs.

Chicago, IL:  A rare opportunity for traders is being brought to downtown Chicago this summer; an educational seminar featuring one of the well-respected traders in the industry- Tom Busby.  Tom and three other professional traders are hosting a two-day market education seminar where attendees have the chance to be totally immersed amongst some of the greatest minds in the industry. 

From July 25- 27, 2010, Bill Costarides, Dr. Frank Stanley, Morgan Busby, and Tom Busby himself will be educating on lucrative futures trading tactics as well as how to use futures to hedge a portfolio. In addition, these industry giants will also be answering questions about placing trades electronically, when/where to place orders, and how to set up the overnight Globex Market.  Fundamentals will not be ignored! Psychologist, Dr. Frank Stanley, will be hosting a workshop on the psychology of making lucrative trading decisions.  The DTI method of trading will be discussed as well as how to use the 24-hour clock as an advantage. 

“The DTI Windy City Workshops are a series of trading education workshops where traders can get together in the epicenter of futures trading activity--Chicago.  Attendees receive educational tools that will sharpen their trading edge from some of the best mentors in the country,” said Busby this event.  

The two- day seminar also includes a tour of the CME and hosted educational event by the ICE in their ICE Zone. 

Don’t miss this rare opportunity to be in front of the author of “Trade to Win”, “Global Markets Never Sleep” and “Winning the Day Trading Game”.   As one DTI student recently said, “DTI has changed my world because of their education.”   Traders; Allow your world be changed by attending this workshop. 

The entire cost of the seminar is $1,995.00.  To register, click here:  http://www.dtitrader.com/store/DisplayDetail.aspx?pid=16

The summer months of June, July, and August have a history of being mini bull and mini bear markets.  We appear to be in the last stage of a mini bull rally.  The market has a lot of resistance at the 1115 area, and that is our topside target for the month of June.  With option closeout on Friday and the halfway point on July 4, we are too close to the top end of this range to get heavily long. 

We bought the Russell and the S&P this morning and are waiting for confirmation that the direction is correct.  These are day trades and not heavy long term positions.  We also bought CBOE today (CBOE Holdings) at $32.51 with a stop in at $26.49.  This IPO was introduced yesterday at $27.00 and jumped 12% its first day of trading.  This is the last major exchange to go public, and DTI has a great track record of trading these stocks with his last play gaining 200% in just under 2 years.  We will be spending a lot of time with this stock over the next six months. 

While we are expecting a higher move to 1115 on the ES, we do not want to be too aggressive here.  We have to remember where this market has been over the last few weeks and how quickly it can retrace.  Maximum market exposure should be no more than 25 percent of your portfolio.

We will also be watching Apple, Inc. (AAPL) for opportunities and continue trading options on Pepsico (PEP) for at least the next few months.  DTI is still long Ford (F) with a $30 price target and a $9.49 stop.  We are recommending buying some shares of CBOE, even if only a small position. 

Thank you
The DTI Team

Disclaimer:  Past Performance is not indicative of future results.

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Market update June 11, 2010

Once again the equity markets have put together a multi day rally to work off extreme oversold conditions.  This has been the pattern for the past several weeks but the trend still remains down.  The 20 day moving average has served as resistance on the previous two rally attempts and the ESM10 has neared this level once again.

Recall that one function of moving averages is to give investors and traders quick glance status checks on the current trend.  With the 20 EMA clearly trending down, we know the trend remains down and has been since early May.  After the big break down on May 6, the ESM10 rallied to the 20 EMA at 1170.  The next rally up to the 20 EMA found the moving average at 1104 and it currently resides at 1076.50.  This simply confirms the trend is down even though the momentum or pace of the down move is decreasing.

It continues to be a nervous market that is overly sensitive to news announcements.  The market is set to gap down this morning in large part due to a much weaker than expected retail sales report.  Some of the talking heads from the Fed have been on the tape recently defending the economy and arguing that it will not slip into a double dip recession.  While historically the odds of a double dip are low, the economic growth is likely to remain subdued for an extended period of time.   The popping of the credit bubble is very different than a garden variety recession and we expect at least a decade of slow and choppy economic activity at a minimum.  There is still too much debt that must be worked off and that is a slow and painful process.

www.dtitrader.com  800.745.7444

*Past performance is not indicative of future results.  There is a risk of loss in trading.

May 19, 2010

Today we closed below the yearly open of 1113.75 on the SP.  This is important to note because it could provide a sense of direction going into the end of the month and into the end of the quarter.  We closed at 1110 today (5/19/10) and this will be a number that we focus on heading into this Friday which is option expiration.  The 1110 will serve as our pivot, in conjunction with the yearly open of 1113.75, and should help lead us in a direction for the next 48 hours.  If we are trading above this number after Friday, we could see acceleration higher; if trading below, could see a reversal and head lower.  Based on historical price action, this should stand for the next 30-40 days.

The current environment suggests further weakness to the downside as the sovereign risks in the EuroZone continue to play out which has contributed to a 4-year low in the Eurocurrency.  There is fear that this is just the beginning of a major economic crisis that could accelerate quickly through the rest of Europe and finally into the U.S.  The “flash crash” that exposed electronic trading vulnerabilities have also appeared to spook some investors.

Silas Peters
DTI Partners

To learn more, please visit:  www.dtitrader.com   or call 800.745.7444.

May 10, 2010 - Risk Management Video

http://www.dtitrader.com/media/tom_riskmanagement_5-10-10.wmv

Past performance is not indicative of future results.