I love to say "I told you so" – it means I got something right.
We did the math for you last Tuesday and predicted the S&P would drop to 2,730, which was a 2.5% pullback from 2,800 and 70 points down on the S&P Futures (/ES) pays $3,500 per contract but, even if you missed that call, we gave you another chance to cover on Friday with our call that the Dow would drop 600 points (at $5 per point, per contract) to 25,400 and we pretty much hit that one on the button for the day for gains of over $3,000 per contract so you are very welcome and what a great way to end our month of free trading tips!
So yes, we know what the market will do today only we're not going to tell you – that was reserved for our Members this morning in our Live Member Chat Room. What I can tell you is we're not worried and this is simply the pullback we expected – albeit a bit later than we expected it in January, since it's actually February at this point.
Keep in mind that we're not Futures traders, we just use the Futures to make quick adjustments to changing market conditions and, of course, for fun during boring trading days. Friday was aqnything but boring and this morning we'll have some follow-through to the downside but, as long as we hold 25,000 on the Dow – we're probably going to survive and turn around by mid-week.
Meanwhile, we look for bounces and, according to our 5% Rule™ (the same one that told us exactly what to play for last week), 2,640 on the S&P (/ES) should be the worst-case before getting a nice bounce off the fall from 2,860 and that's 220 points so we'd look for a 44-point weak bounce to 2,684 and another 44 points takes us to the strong bounce line at, Ta Da!, 2,728 – close enough to 2,730 that we can call it a strong confirmation of our theory.