DeWayne Reeves'  Instablog

The S&P 500 Emini Futures traded inside a 7 point range again today until Apple released their record blowout earnings. When Globex opened at 3:30 CST the market made what seemed to be an obligatory 3 point move up to our next Weekly Trading Zone 1315/1316 where it promptly stalled out and has remained since.

Apple (AAPL) is selling a whole lot of just about every product it makes - and investors are loving it.

The company's stock shot up more than $32, or nearly 8%, in after-hours trading after it announced that its first quarter - which ended Dec. 31 and spanned the holiday buying season - was its best ever.

Revenue surged 74% to a record $46.3 billion and profit more than doubled to $13.1 billion, blowing away Wall Street's expectations as Apple sold more iPhones, iPads and Mac computers than in any quarter in its history.

Apple's market cap is higher than the gross domestic product of Greece, Austria, Argentina or South Africa. As fans like to say, the only thing bigger than Apple was Steve Jobs. The Apple ascent is dramatic. Just 10 years ago, the 35-year-old company had a market cap of only $10 billion.

Now this is great news indeed for Apple shareholders and fanboy's everywhere, but did I mention the overall market reaction was a 3 point bump and stall? May I suggest returning your seat to it's upright position as the Captain has just turned on the "what are they smoking?" sign. Prepare for turbulence up ahead.

The Pre-Apple Setup

Live Trading Room
S&P 500 Emini Trade of the Day

Here once again - one of my favorite setups from today's action:

• Price breaks dynamic resistance (red dots)
• Price pulls back to the top of the Weekly Trading Zone 1305.00
• The BBC (green line) crosses above dynamic resistance and meets price at the WTZ
• The rest is poetry in motion

I hate to interrupt the moment, but someone always wants to know "What's that worth in real money?" How crass right? My standard answer is - "You can't put a price on...." but the truth is (just between you and me) you can. You can put a price on it right down to the tick.

1 tick = $12.50 per contract

4 ticks = 1 point

1 point = $50.00 per contract

Rule of thumb - 1 contract per $5,000.00 of account equity

Rule of thumb - 10 contracts per $50,000.00 of account equity

For the 1 contract trader - $200.00

For the 10 contract trader - $2,000.00

Quite frankly - NO!
The margin required to trade 1 contract is only $600.00
The margin required to trade 10 contracts is $6,000.00

There are a lot of busted thumbs on Wacker Drive.
(where do you think they got the name?)

Good Advice (free)
You need to determine your own risk tolerance. Start with 1 contract no matter what your account size. Increase the number of contracts you trade based on market generated profits. Using the above structure you don't need to open a $50k account. If you do, the temptation to trade size greater than your skill level will not only be tempting, it will be overwhelming. Patience and discipline trump account size every time. If you don't believe me, the next time you see a guy with two busted thumbs... ask him.

Live Trading Room
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• Michael
• Burt
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and myself, dedicate the next 90 days of our life to teaching you everything we know about trading Emini Futures. From the mechanics, to the technology, to the psychology. Our goal is your success. The journey itself is life changing. Are you ready? It all begins with the click of your mouse -

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Emini Podcast for Tuesday 01/24/12