Emini Trading Blog

Posts Tagged ‘Existing Home Sales’

Busy morning for our aggressive trader, Bob. On the other hand, our fearful trader J.R. is feeling frustrated, a little down after seeing two large moves and regrets missing “all those easy points”. The Existing Home Sales report was much better than forecast. This, along with Bernanke’s “growth in the near term” comment has spurred markets higher.

Our aggressive-inclined trader “Bob” has been busy. He took, of all things, a sell-side entry at the open near 1015.00. Feeling a bit flush from yesterday’s gains, he had a hunch Existing Sales would disappoint and liked selling at Monday’s high. So, he enters by selling five contracts! To give the trade space, he placed his stop two points above the high, at 1018.00. For a few minutes all seemed fine. He moved his stop to 1016, after price dropped to 1011. This minimized his risk to a loss of $250. Which traded shortly thereafter. Now down $250, Bob is eager to catch up.

J.R Down, our fearful type trader meanwhile, has silently asked himself the last couple of days “what is wrong with me?”. He wanted to buy after the huge run up. But, needed price to retrace down further before he would. This never happened. Yet, from the minor move down, price has now traded up to within one point of the day high. Wondering if he will ever get this right, J.R. waits and watches.

So, how did our fictitious aggressive trader “Bob” fare? Quite nicely on this trending day. Very near the close he moved his stop up to 1005.00 which was reached just before 16:15. Gain of five points ($250) on the final contract means he finished the day with a gain of $2150 (21.50% of 10,000 equity), less commissions on eight contracts.

This shows how great an impact matching the style of your trading to the behavior of the market can have on your profitability! Certainly the right day to trade for the bigger move. Bob feels more than satisfied at first. But then, he starts to feel uncontrollably excited about tomorrow. Will he be able to hold on to all he has earned? Tomorrow we will see!

In the way of known news announcements that could move the markets, the National Association of Realtors will release their Existing Home Sales report in the morning at approximately 10:00, EDT. Earlier this week, the U.S. Commerce Dept. reported an unexpected drop in Building Permit applications. However, in view of the deep plunge in real property values, perhaps the forecast 5.1 figure will be realized. Even if it isn’t, it seems the current state of the market could overpower a slight miss. After today’s push higher (beware of lighter and lighter volume), despite further unemployment pressure and corporate warnings (see: Sears), a retest of the 1016 highs seen last week appears to be the only cap in sight.