Afternoon,

I hope everyone was out of the market before the Fed announcement. The market went up and down 8 points two times before finally deciding to head down for good. Notice on the following chart that the price stopped right at Woodies pivot twice then broke down and spent the rest of the afternoon bouncing in and out of S1. Here is the chart.

Fed Announcement Price Action

Click on chart to enlarge.

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Afternoon,

Before I get to the wrap-up, I thought I would answer a question that I have been getting a lot since I started my blog. The question is: Ron, what is up with this fishing thing?

The answer is three fold. First, I like to fish and instead of making the blog only about futures trading, I thought I would try to make it fun. Second, for those of you have ever fished, you know the thrill of hooking a big one. I have the same feeling when I “catch” a winning trade. One of the reasons I use the term the bobber set-up was because if you have ever fished with a bobber, the set-up kinda reminds me of the bobber right before a big one pulls it under. I know, that sounds corny. Finally, many of the qualities needed to be a good fisherperson (notice how politically correct I am?) are needed to be a good trader. Those include but are not limited to: patience, patience and then, a little more patience.

Ok, now to the update. As expected, today was another difficult day as traders remain unwilling to commit before tomorrow’s Fed rate decision at 1:15 pm CST. My recommendation is to be out of ALL positions before that decision time. The Russell 2000 gaped down breaking a trend line drawn from yesterday’s pivots at 10:21 am CST and the pivot at 14:57 pm CST. There was a trader’s trick set-upon the 8:42 am CST bar with an entry of 724.00. That bar was also an inside vertical bar and the trade happened at the 56 EMA. The market then traded down in a herky-jerky (yes, sports fans, that is a technical term) fashion. On the following chart, I have drawn an external fib using the TS pivot at 9:33 am CST (point 2).and the TS pivot at 8:42 am CST (point 2). Price stopped exactly on the 127% fib. That area was also close to Woodies S1. Price moved up from that area and then crashed down through the 127% fib giving us a trader’s trick set-up at 11:06 am CST with an entry of 716.80. The 161% fib area was at 716 so was watching closely at that area. The price paused at that area and I exited on the 11:24 am CST bar with an exit of 716.20 for a net profit on the trade of .60 points. Here is the chart for trades 1 and 2.

Trades 1 and 2

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Afternoon,

The Russell 200o trended higher today, most likely in anticipation of the FOMC meeting which starts tomorrow with the interest rate announcement scheduled for Wednesday at 1:15 pm CST. So expect some more of today’s type of action through out the next day or so and for sure, be out of the market around the announcement time.

Let’s start out today with some more fib studies. The Russell 2000 e-mini’s opened flat and had a very big 3 minute bar up followed by 3 big bars to the down side with price stopping at the  127% fib area as measured from the pivot at 15:09 pm CST Friday (pivot 2) today the pivot 1 this morning at 8:33 am CST. The price reversed right at that area. Let’s consider what happened next and see if we could have developed an entry even though there were no pivots to draw a trend line through. First, we know that the 127% fib area is a strong support/resistance area. Second, the was a very bullish bar at 8:51 am CST. Some trade might have considered that as a possible entry but let’s see what happened next. The price rallied up though Woodies pivot (the yellow line) and then pulled back to that same area with a bullish bar set-up. A bullish bar set-up would be a red bar followed by a big green bar. Coupled all of this with the fact that price had just tested the 127% area and you could have entered above the bullish bar at 9:09 am CST. Did I jump in? Nope, just trying to get you to think of different possibilities that occur every day. Here is the chart.

Chart Of Possibilities

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