US Markets have done their very best to keep a stiff upper lip and shrug of the Facebook Apocalypse. We are now well into the Wednesday session on a Tuesday night (Globex), and she's looking a little tired, wobbling on her heels, after all it has been a rough few days. The Facebook (FB)was supposed to have changed everything, a Knight in shinning armor.

Sure we all heard it before but this time it was supposed to be different right? With a net worth 100 times greater than the New York Times and so many friends... so many friends... this was no bubble, this was about flying cars and mining asteroids. This was Bono and the Great State of California and even poor Morgan Stanley (MS). I wonder if he'll ever find work again? It's been a rough patch for all the Morgans, even Jamie.

In the time it took me to type this we have yet another surprise rally threatening on the horizon at 11:38 PDT. Feel free to date it if you must, just don't get carried away. I hate it when you get hurt.

Here's the rundown on what went down on Wall Street:

After a 71-point rally, the Dow Jones Industrial Average  DJIA fell 2 points to end at 12,502.81.

The S&P 500 Index SPX  added nearly 1 point to 1,316.63.

The Nasdaq Composite COMP  dropped 8.13 points to 2,839.08.

Late in the session comments from Greece’s former prime minister warned that the economic impact of Greece leaving the euro zone would be severe. The Euro dropped below $1.27 after his remarks. As you recall we have been suggesting since December of 2011, the possibility that the US Dollar and the Euro will find parity by 2013.

S&P 500 Emini Mentoring Program

There will be another 30 minute Q&A Session tomorrow for those who are currently enrolled in our 5 Day Mentoring Program. Please be prompt the session begins @ 4:15 Eastern.

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Charts and commentary will resume on Wednesday May 23, 2012.

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It was a beautiful spring morning in Menlo Park. Blue sky, puffy clouds, and hooded hackers as far as the eye could see. Messr. Zuckeburg chose not travel to NYC, instead the Nasdaq came to his highness and from his headquarters - the kingdom that Mark built - he rang the opening bell.

Keep in mind there is no physical "NASDAQ bell". It's just a term borrowed from the old days. The NYSE once upon a time actually used a metal bell to alert those on the floor that trading had begun. Instead, Zuckerberg pressed a Like button and signed a screen to symbolically open NASDAQ trading for the day and thus began a historically tragic day on Wall Street.

The IPO price of $38 sounds reasonable enough right? Well there's a crazy little thing called share count. The number of shares issued multiplied by $38 gives the company a P/E ratio of 125. Let's put that into perspective, Apple (AAPL) trades at 15 times earnings. In other words, based on the revenue from all the very fine physical products they sell from iPods to iPads, Apple could actually buy themselves in 15 short years. Facebook on the other hand would require 125 years to purchase themselves, and they have no physical product.

The early warning sign was the 30 minute delay of the first print. The clear writing on the wall appeared when the Underwiters themselves were forced to stand on the bid all day to keep the share price from dipping below $38.00. The final print was $38.23 on volume of 580,587,742 shares. That's a lot of traffic to climb 23 copper pennies. The high of the day was $45.00 (ouch). In other words, the smart money made .23 while some retail traders lost as much as $6.77 per share.

Based on today's closing price, Facebook will need to secure $1 out of very $10 advertising dollars spent worldwide over the next year to justify its valuation. In case you haven't heard General Motors (GM) has pulled their advertising from Facebook because, in their own words "it didn't work".

Over the next few weeks the market itself, (not Hedge Funds, Rock Stars or Sovereign States) will properly price the value of this stock. Unless there is an uber secret revenue stream yet to be revealed this is a $12 stock on a sunny day with blue sky and puffy clouds.

As much as you Like It, use it, or live on it, if you have the opportunity to short this puppy @ $38 off the open on Monday... Godspeed.

Of course always consult with a licensed investment professional before making any investment decision.

S&P 500 Emini Futures

Here's the S&P Emini Futures on this historic Facebook day - 

S&P500 Emini Futures (ES) Facebook (FB) IPO

Does this mean the day was a loss and there were no good trading opportunities? Far from it. That's exactly why we trade Emini Futures. You see above what happened to the market overall, below I will show you just a few of the opportunities our system offered.

ES Emini Long - 7.5 Points Max Potential

ES Emini Long - 5 Point Max Potential

Do these trades look to good to be true? Did our system really issue the direction and entry price beforehand exactly as I've shown it?

If it did, can you afford to trade without it?

Let me show you a little more of what happend -

The Day Facebook Killed The Market And CFRN Partners Had A Chance To Get Fat

ES Emini Futures 05/18/12

ES Emini Futures - 9.5 Point Drop

5 Point Rally on FB Folly

ES Emini 9.75 Point Drop 05/18/12

Now let's be perfectly clear. I'm telling you that our system handed us every trade above with a "to the tick" entry. If you don't know me and yet you believe me, you must be barking mad. What I've just shown you is to good to be true. It really is. But it really is what happened today.

Did we have a few that got stopped out for 2 points each? Yes we did!

Here's my suggestion, come to our Live Emini Trading Room on Monday and I will apply the indicators to these charts right before your eyes and show you exactly how each entry gave us an exact price to be long or short and I'll even show you the ones that got stopped out. Got Game?  Apply!

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Partners Meeting tonight and I need to find my umbrella for tomorrow. The long awaited much ballyhoo'd Facebook (FB) IPO is upon us. Will it fly or flop? Stay tuned...

The S&P 500 Index SPX fell 7.69 points, or 0.6%, to 1,330.66, ending below a key technical support, at 1335. Down 9 of the last 10 sessions, the Dow Jones Industrial Average  DJIA dropped 63.35 points, or 0.5%, to 12,632.

CFRN Partners spent the day trading inside of a range defined by our Weekly Trading Zones. Is it possible to wring 35 points out of a 7 point range? Probably not, but it can be fun trying...

 S&P 500 Emini Futures

click to enlarge

Emini Volume Charts

Here are 2 examples of Volume Charts. The first chart is the S&P 500 Emini Futures.

S&P 500 Emini Volume Chart

Just like last night we can still see both Price and Time on our chart but we now have the benefit of a 3rd important piece of information known as Volume. What is Volume?

Volume - In the equity markets, fractional ownership of a company is traded in what are known as shares. In the futures market we trade what are referred to as Contracts. Many traders stand firm on the belief that the more Volume a market possesses, the better the market. While more volume or liquidity as it is often referred to does reduce the spread between the bid and ask price, it also keeps some of the smaller volume markets out of the limelight and in doing so can present you the retail trader with exceptional opportunities.

On the Volume Chart above each candle represents 10,000 contracts. Each time 10,000 contracts exchange hands, a new candle is created. Keep in mind that even though we have the benefit of time on the horizontal axis and price on the vertical axis, it is Volume that creates this chart. Depending on market conditions you could see 1 candle painted in a minute or it could take an entire day. For it to take an entire day is an extreme example but I want to make sure you undestand that volume is the creative force when working with Volume Charts. Both Price and Time are simply signposts on the road up ahead...

Over time you will learn to spot when the market is "slow" as compared to when it is "fast". You will also learn to spot when a significantly large amount of volume is unable to move price, and the opposite, when very little volume is able to move price a great distance. Understanding thedynamics at work behind these observations are critical in your journey to become an Emini Trader.

Dow Emini Volume Chart

The above chart is the Dow Emini Futures (YM). On average you will see 100,000 contracts traded in a day. For most retail traders this is still quite sufficient in regards to volume. Each candle on the chart above represents 500 contracts. These charts should not be confused with Volume Analysis, Delta, or Market Profile. Those are different concepts entirely and will be covered in the future.

Our co-host David often speaks of the market as being 3 dimensional in that it is comprised of Price, Time and Participation (volume). The following link may provide you with an "awakening" to this concept or it may simply give you a "hearty chuckle". 

Either way, I am pleased.

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The S&P 500 Index SPX dropped 19.64 points, or 1.5%, to 1,338.35, its lowest close since Feb. 2. The Dow Jones Industrial Average DJIA  fell 125.25 points, or 1%, to 12,695.35, its lowest close since Jan. 31.

The Globex session gapped open lower Sunday night and as the gap closed we issued a Tweet to look for a potential reversal on the S&P Emini Futures @1350 and 12790 on the Dow Emini Futures -

SP 500 Emini Hourly Chart 05/13/12

Dow Emini Hourly Chart 05/13/12

You did get the Tweet - Right?

If not... request a CFRN Emini Toolbar

How To Read Emini Charts

Emini Futures Charts are clearly confusing at first glance. With a little time and practice they do become readable. There are many flavors and varieties from Candlestick, to Bar, Hourly to Range, and even the more esoteric ones such Heikin-Ashi.

Don't be overwhelmed by the many choices. Start with a basic Daily or Hourly Chart.

Basic Daily Emini Chart

Basic Hourly Emini Chart

On both charts you are given 2 important pieces of information -Price and Time. The first step in learning to read an Emini Chart is understanding where price is now, relative to where it has been. On the Daily Chart each candlestick represents 1 day. The above charts are Globex charts so you are looking at a 24 hour session not just the Wall Street session. On the hourly chart each candle represents 1 hour of time.

On both charts you can clearly see 4 important pieces of price infomation in regards to the unit of time you are observing:

• Open
• High
• Low
• Close

The purpose of learning to read a chart is to determine the current trend or if one even exists, and to understand with some degree of probability, where price may move next. Each chart style and time frame will exhibit unique characteristics which can only be learned over a period of time.

Before you begin to layer on indicators, simply observe price in real time as it unfolds. As the markets are fractal in nature you can watch much smaller time frames down to 1 minute. In the beginning I suggest that you only go as low as a 5 minute chart. With patience and screen time, what appeared initially to be random chaos, will start to emerge as a language the you can understand and read and be excited about.

Every chart tells a story! Go read a few...

Over the next few days we will talk about specific chart types other than the Daily and Hourly.

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To all the Mom's - Happy Mother's Day!

S&P 500 Emini Futures

Did you miss these trades?

ES Emini 04/23/12

ES Emini 04/30/12

ES Emini 05/02/12

ES Emini 05/03/12

ES Emini 05/06/12

ES Emini 05/07/12

ES Emini 05/08/12

ES Emini 05/09/12

Will You Miss The Next One?

Spend 1 Full Week In Our Live Emini Trading Room!

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