A Dead Man's Flip of the Coin

Typically the Monday before option expiry Friday the Dow has been up 23 of the last 28 years, with 2007 the first loss in 7 years.

And with the exhaustive gaps we saw yesterday, with highs to 9876 by mid morning, we provided a recalculation of the support and resistance and pivot lines. Subscriber Jurgen, new to our service, wrote yesterday after reviewing the manual and videos, and "confused" on how we are to use support and resistance.
Let's use yesterday as an example:

1. When we re-calculated the pivot point was 9775.73. After the initial run up, which went to R1 on the morning calculation, the market moved back to this re-calculated pivot and did little.
The key here is the market must remain below or above the pivot to show a clear bias.
2. By noon the market had hit the re-calculated R1, which was 9823.40. If a trader was holding calls they had bought this would be a key time to consider, if profitable, selling them, as the next step in s2 and the market often hesitates. Many of the rules on S/R are written right below in our daily alert.
3. S1 yesterday did not hold. Day traders may have bought a put at that time, as they saw the hesitancy, and waited to sell if the market moved to the pivot, or down to s1. Sure enough, this occurred, the market dropped right to the re-calculated s1 at 9745.71, and puts could have been profitable for day traders.

A common rule we often teach for regular trading is: "Buy at s2, sell at r2, and buy at r2, sell at s2." This rule is for the longer range trader, and note that recent massive moves in the market of over 100 points often in an hour make this type of trading tougher.

There are NO hard and fast rules on how to use S/R, and this is the hardest thing we teach. Support simply means that this is an area the market has hesitated before, as does resistance. When the market hesitates it is a "trigger" to the floor traders, and we see action of either "shift of bias" or stronger upside or downside when we hit core support and resistance lines.

Here's an example of where we used support/resistance and our Dow projections for maximum profits. This was our new signal for yesterday:
OEBKT NOV 21 2009 500.00 CALL

"Follow futures, and if futures are UP 50 points buy this at 'market' and sell to 9876."

Futures were up, and traders bought at opening and were able to sell for over a 1.00 per contract profits within hours. This is also a position that can now be "held," as you'll see in our instructions below.

The value of support and resistance is that we know certain things occur then normally, and can often take advantage of buys and sells where we know the market might "hesitate."

Study our videos on support and resistance, and use them as "fluid" tools. Re-calculate, or watch for our Twitter, if the market really moves, as you can begin to see many patterns emerge.


It is a dead man's flip of the coin if the market will hit 9950 to 10,000. The bulls are surely trying, and resistance seems strong. There is good news, but really, enough good news?
We feel that is part of how Wall Street is thinking, and where the hesitancy is. If we hedge, somewhere we will lose. We'll hold with the call for a new trade and list a put for risk traders that want to hold for next week.