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Monday, July 7, 2008

Stock trading, Stock market: NDX trading, QQQQ Trading, NQ trading July 7, 2008 (afternoon)

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Stock traders, investors, forec traders (currency traders), stock market players:

After nailing the top of the morning (which turned out to be the top of the day), here what took place in the afternoon:

12:56PM: NDX at 1815. A good place to take profits in case it does not go down further. That would be 32 NDX point profits.

Area of 1797 is where I currently see strong buyers, but it may not go there. If it goes there, I plan to go long but after my calculations tell me that indeed the buyers in that area are strong and are defeating the sellers.

1:02PM: with NDX at 1803 I am starting to scale in for long side.

I added to the long when NDX revisited 1802, but not all my orders got in as I was not in front of my computer and NDX did not touch 1797. It stopped I think within a point from it.

As predicted, the area of 1800 was a bottom for NDX. Also as predicted in the discussion of the morning, NDX (and the market) run up towards the level of the open today. If a reader does not know why the market run up, and why it headed towards the opening price of this morning then you need to know more about the market. There is a fundamental reasons (in addition to short covering).

A principle that one should never lose sight of is this: the market never contradicts itself, (which I also refer to as the market never lies).

It was a good day.

In addition to the stock market I also shorted EUR/USD, as it is negatively correlated with the stock market.

In fact it is safer to play a long side of stock market, and a short side of oil, by shorting EUR/USD. It is also less expensive in commissions and leverage needs.

The reason for this is that if one wants to play a side of the stock market it is also better to play it in a trend. Well since stock market is in a down trend and oil has been up and is probably at the top, playing the long side of stock market by going long the market or shorting oil is counter (recent) trend.

However EUR/USD is already going down or at worse not moving up. Therefore a long side of stock market due to oil or dollar is better played by shorting EUR/USD.

Attached is a chart of my entry in EUR/USD.

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Happy trading,


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