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Last month I was with a leading member of the Merc in Chicago. He is one of
the top traders in the S&P pit. Grinds his corn exceeding fine, each day,
every day. Much perfers his hand spead outwards and made a ton of money
selling this bull market all the way to top. "I often wonder what I could
have made if I had bought it!!" he confided, but then a successful short
seller is a hellava chap!!
Anyway, he told me that the one thing all the traders in the S&P pit watch
continuously is the Bonds. Well, that's not really very surprising because the
Bonds lead and everything else follows. Just stick an S&P chart up with the
Bonds above it and you'll see just what I mean.
By the same token the Dow (which of course is in complete sync with the S&P)
is followed over here by the FTSE. If the Dow finishes 70 points down, you
can bet your shirt the FTSE will open - and probably gap - down. Then it will
follow the Dow all afternoon, while the Dow follows the Bonds and so it goes
on.
What is the point of all this. A lesson in watching for trading patterns
which you can follow and trade and make money. You may think that TIME is
everything, but I think - when you think about it carefully - you will realize
that TIMING is much more important. Watch the price action in front of you
and act with a real sense of TIMING, based on a good risk/reward ratio and
your half way to becoming a decent trader.
>From just studying the S&P in relation to the Bonds you will see that almost
always when the Bonds finish on the high or the low of the day, the S&P (with
nothing to guide it along... !!!) will simply follow the lead and trade on up
or down, accordingly. Maybe not a lot, but usually for a few hundred bucks or
so - even a few grand sometimes. But TIMING is of the essence. It's not a
Time Day, give or take a day. There is no resisance or support levels to
look for. It's Price Action right in front of you. You either see and take
it or you don't. It can last the whole hour before the S&P closes or it may
only last a few bars.
It only happens a few times a month - like tonight, last night and... You
tell me!!
Timing rather than Time. Try it. It's Tradeable!
Bill Eykyn
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