c06 JWBT016-Busby October 10, 2008 20:38 Printer: TBD
The Path of Least Resistance 75FIGURE 6.5 On March 27, 2008, the RoadMap was red most of the day reflecting
the negative sentiment of the market. At 2:37PM, the TTICK was registering a nega-
tive 12.47, the NYSE tick was negative 847, and the issues on both the NYSE and the
Nasdaq were very negative.close neared. But, after a few minutes, it was clear that their efforts would
not succeed. Below are charts of both the Nasdaq and the Dow. Figure 6.5
captures prices for both the Nasdaq and the Dow during the relevant time.
The Nasdaq price is noted under the symbol NQM8 in column two and the
Dow price appears under the symbol YMM8 in the third column. A trade
on either of these indexes resulted in a respectable profit. As indicated in
Figure 6.5, at 2:37PMthe Nasdaq was trading at 1790.25 and the Dow at- All indicators were negative and pointing to a sell. When the bulls
failed, the bears grew stronger. The bears are clearly in control.
The Custom Page on the RoadMapTMsoftware tracks the action and
records real-time data. When we were making the trade, the issues were
extremely negative. Those prices are circled in Figure 6.6.
As time for the session’s close neared, the mini Nasdaq fell about seven
points in a few minutes. There was plenty of time to exit at the daily low
and pick up $20 per point or $140 per contract. Those traders who were
trading multiple contracts were able to pocket a little extra cash at the end
of the day. In the final few minutes of the session there was some move
up in prices, but traders had plenty of time to exit this trade with profits.
Figure 6.7 charts the Nasdaq move.
On that same date, the Dow saw a much greater move downward. At
2:37PM, the Dow was trading at 12330, and by 3:00PM.Itfelltoalowof - It was possible to make as much as 40 points on that trade. At $5 per
point, that is about $200 per contract. It is true that prices tried to move
up after hitting their lows. That is where the art of trading plays a major
role. By using key numbers, I knew that support would probably enter the
market at 12300. If the bulls succeeded in breaking through that price, I
knew that the next area of support would be 12289. I knew this because
historically both of these numbers are key numbers on the Dow. Knowing
key numbers allows traders to maximize profits and avoid risk. Those who
held the trade to the close on this day did not make money because once
the 12289 price held, the bulls pulled prices back up. But good tape reading
and risk management skills should have made traders aware of the danger
of holding positions once the 12289 price held. Trading is an art and not a