Tumultuous Tuesday – Markets Gyrate Ahead of the Fed

What a fun week it's been!  

As you can see from our S&P chart, we've popped over our strong bounce line at 2,140 but, like a magnet (or the Godfather), the S&P keeps getting pulled back in though it seems just as much money can be made betting long at 2,140 as betting short – as long as you use very tight stops on the wrong side of the line.

So why, you may wonder, don't we bet long?  Because we still have plenty of long positions in our portfolios, and we already have plenty of bets going that way and also because we think the risk/reward strongly favors the downside at 1,240.  At 1,220, we may be inclined to play for a bullish bounce – as we did last Thursday Morning, when we prediceted the move back to 2,150 right in the morning post:

"2,127.50 was our weak bounce goal on the S&P 500 (SPY) and we finished the day yesterday at 2,125.77, so not quite and, unfortunately, today we must raise the bar, and our expectations, to the strong bounce line at 2,140 and we're not going to really be impressed until 2,150 is taken back but let's not get ahead of ourselves because, as noted in the title, we're looking down, not up."

A move from 2,125 to 2,150 on the S&P Futures (/ES) is good for a gain of $1,250 per contract but remember – I can only tell you what the markets are going to do and how to make money trading it – the rest is up to you…  Today we told our Members that we liked SHORTING the S&P (/ES) Futres at 1,240 and the Russell (/TF) Futures at 1,235 and the Dow (/YM) Futures at 18,100 – we'll see how those do tomorrow but back to 2,120 would be good for another $1,000 per contract (tight stops above the lines, of course).