Chapter 2: What You Should Watch For In The S&P
‘I was reminded that when we lose and I strike out, a billion people in China don’t care.’ That quote from Reggie Jackson pretty much sums up his approach when stepping to the plate. Swing for the fences and apologize later… or never if George Steinbrenner was involved.
It might not be a billion people in China, but there are certainly plenty of institutional traders who simply don’t care how or when you strike out.
If it’s of any comfort - they love it. They have their pick of millions of retail traders offering up meatball trades - literally every minute. It’s easy money and it’s always there for the taking.
Here’s a big reason many retail traders lose big-time in the S&P: They’re watching the S&P.
Yep. You read that right. They’re trading the S&P and they’re losing… because they’re watching it. Okay, let’s add an important detail: They’re ONLY watching the S&P - which means they are missing out on clear indicators that sit directly outside this world-changing index.
Specifically, there are stock predictor sequences OUTSIDE the index that give, clear, early and easy-to-follow guidance on where the S&P 500 is headed.
While millions of traders stare at their S&P eMini, the SPY or any other instrument and then bang their heads against the wall - the big boys (the institutional traders) are looking elsewhere.
So exactly where is ‘elsewhere’? It’s the 5,000 stocks outside the S&P 500 that ultimately drive the sector behavior that you end up seeing within it.
What many traders overlook is the fact that there are thousands of middle market, publicly traded companies that simply aren’t part of the S&P. Individually, they won’t sway the market - but when you put them together… you get an amazing picture of what is about to take place.
For those of us that don’t have a super-computer for a brain, analyzing the behavior of 5,000 stocks simply isn’t realistic. Translating that behavior into information you can use in real-time to take trades? Out of the question, unless you have help. Here’s the good news: There are indicators that will help you easily spot these predictor sequences in real-time. Giving you the time you need to analyze and then size up a trade that works for you.
Best of all, you are using leading intelligence to make your entry - before the S&P fully responds. This is the advantage that most retail traders don't even realize they're missing.
Check out a recent S&P move with plenty of ticks to make any trader at Goldman or Barclays happy.
If you were able to simultaneously rip open the charts of the thousands of stocks in the same sectors across the Dow Jones, Nasdaq and NYSE - you would have seen it coming.
With plenty of time to spare.
Now, you can go one chart to the next, frantically trying to figure out what the Dow, NYSE and Nasdaq are trying to tell you. And if you ever knew what Lassie was saying when she came barking, then this approach is for you.
Like thousands of butterflies flapping their wings in another market - the telltale signs of a big move in the S&P appear elsewhere.
For the rest of us? How about just a simple indicator that does the scanning for you based on the signals that are surfacing across thousands of stocks?
Here’s what it looks like. Basic, simple and clear - based on the source of the indicator across the NYSE, Dow and Nasdaq.
Now that you know where to look, and what to scan for - let’s see our newfound perspective in action. And by ‘in action’ we’re talking about one thing: daily profits.