Newer Post At Trade Guild

I forgot to publish the last Trade Guild post so please read it and pay particular attention to the parts about the VIX and TRIN Index which is also called the Arms Index then come back here and read on.


OK, got it? There's still nothing that leads me to believe we are seeing anything other then a bull trap. I was interested today to see if the 1 min charts would lead to the 5 min charts starting to reverse and become bullish-JUST THE OPPOSITE. The 5 min charts are again pegging new lows.

The two advantages we have tonight on the short side are both the VIX hitting multi month lows and the TRIN Index hitting a level that is commonly sold off as I demonstrated in the Trade Guild post tonight. The VIX is the CBO volatility index or known to traders as the fear index. It trades inversely to the market. When we have high VIX readings, we see a rally as fear is strong in the market. When we have low readings like tonight's multi-month low, it shows complacency in the market and typically we see a sell-off from there. The other bit of good news for bears is the TRIN Index also hit a multi month low and in the Trade Guild article I told you the results of the last low reading. A low reading like today's is usually followed by a move the next day or two, but usually the next day. When it's low it indicates an overbought state and when it's high, ESPECIALLY if it is above "2" you almost always see a rally the next day. We are well within the range to produce a sell-off and considering we are probably looking at a bear trap, a sell off just needs to break a few nearby support levels which WILL trigger the bull trap, which most commonly and reliably leads to a panic sell-off. So tonight we are in good shape, beyond the 3C charts and breath readings. The fact that 29 DOW stocks closed up in and of itself, is a bearish event showing an overbought market, the same thing the TRIN and VIX indices are pointing to.

I have custom tailored some trades (there are over 20 tonight) to this situation to take maximum advantage of the situation.

Check out the most recent spread sheet "July/August Trades" for tonight's trades, many of which will execute tomorrow. If you have any of the high flying cats and dogs trades, email me for the most current info and stops. When we see the "cats and dogs trades", which are low priced and high flying like JDSA from last night, it is a sign that we are at the end of a rally or bull move.

Statistically and probability wise, tomorrow is the best setup we have seen in awhile. Get out there and make some of those trades! Remember to use your risk management plan but also remember that as traders, we re paid to take risks. We just try to mitigate the risks and put the probabilities in our corner.

Best of luck!