Stocks & Commodities V. 22:10 (130, 118): At The Close by Jayanthi Gopalakrishnan
How did the markets open today? For the last four
months, Iíve been watching market movements in
the e-minis. After all, they are a popular trading
instrument, and one that provides the opportunity
to make a few points in a trading day. This, along with my strong belief that you should only trade a market that you understand, piqued my interest in paper-trading them. Let me walk you through a trading day.
Iíve set a few guidelines I intend to follow. The first thing I look at before trading anything is the daily chart of the Standard & Poorís 500 index, since it closely resembles the movement in the e-minis. As you can see from Figure 1, the S&P 500 is currently trading below its 50-day moving average. In addition, prices have broken below a critical support level at 1080.
This could mean a further decline in prices to levels lower than seen on this chart. With this negative sentiment, I am not even going to open a long position to make a trade. All charts point to a downwardtrading
market, which means great opportunities in shorting.