If you’re like any investor your looking for good ideas to help gain profits from your trades, Today we look at the Dow Jones ($INDU) to see where our macro trend will be heading and where you should position yourself accordingly. In the chart below you can see the the Dow failed to break the previous high of 13,250 which is not very bullish. That said it is not that bearish either. Our next move is going to be lower to re-test support at the 12,750 level and hopefully the bulls can reload on their positions and gain some steam for the next run up.

Typically in an “election year” US equities tend to run up and into the election, this is the trend we are seeing now in the Down Jones and SP500. You can also see the ground work for a move down as defensive names like Kraft (KFT) move higher to 52 week highs. That and the combination with the VIX moving up two dollars in the past week it’s plain to see that a move down is imminent.

Look to tighten up your stops and for you day traders try out a short to see if you can scalp a buck. there’s no shortage of ideas to make profits, just pull the trigger and have your stops in to protect yourself.

Dow Jones Futures Chart 8.27.12

Looking at the dow jones index when you’re a technical trader as I am you need to be aware of the left end of the chart just as much as where you think the right side of the chart is going to go. We’ve had a big jump on Monday in the markets due to Bernanke spoke but did not say that there was going to be any QE3

A lot of the chatter today is about the slow down in China and what exposure you need to have or trim off. A lot of stocks have had double digit percentage moves and one of the big things being said is to trim your gains and lock them in. As much as I agree with that, as in always locking in profits, I tend to let my stops take me out. The trend is up right now and you can distinctly see that in the chart provided below.

I try not have have targets but let the market decided my gains and I control my losses

Now what does the right hand side of the chart have anything to do with the market direction. In three days looking at the daily chart we will have over a thousand points taken off the bottom of the chart and as traders we typically have very short term memories. This will make the charts look less bullish and give the impression that the market can now go higher since the bottom number on the chart will then be 11,250 and not 10,500

when traders and investors see that the market has only come from 11,250 they will have the impression that the market can melt up even further and that the markets dips need to be bought or you’ve lost the opportunity.

Dow Jones Index Chart

Looking at the Dow Jones Futures you can see on Friday a bounce off the 12,910 close of Thursday. That tends to be a a bullish sign when previous closes are used as a buy point. Tuesdays big down is almost recouped and a very nice support line can now be used by traders. With the Greece credit swap now behind us, well relatively, the major news outlets can focus on company earnings and economic data points.

The next resistance for the Dow Jones will be to close above the 13K mark and a close above the 13,055 mark will be extremely bullish and hopefully pull in some new money into the markets.

If the Dow can’t break above or close above that mark it could start a down trend and confirm a triple top where the first one from April and August. we could also see some volatility on Friday with a “quadruple witching” and on Wednesday Ben Bernanke speaks which could also move the markets

Dow Jones Weekly Chart

Today the Dow Jones Futures are looking at their first triple digit loss (-166.08 at the time of writing this post) and volatility is creeping up. Futures traders are positioning themselves for the Thursday Greek debt swap which is dragging the markets down.  There are also concerns in the middle east that the bears are using as traction to pull the market further down.

VIX Stock Chart

One chart Dow Jones Futures trader should keep an eye on is the VIX  (Volatility Index) I’m sure you know it’s a measurement of stock volatility and can help traders gauge market sentiment and direction. In the chart you can see that the VIX has gaped up from the 18’s into the 20’s and also gaped above the down trending fifty day moving average.  With Thursday a couple of days away still I would expect increased volatility and perhaps a consolidation around the recent high of 22.25

You can expect a break out in the VIX if no deal is made and a run to 25 could be easy done.

So what does that mean for the Dow Jones Futures?

We’ll look at the Dow Jones Daily Chart

That big red down bar looks a little refreshing…. Why refreshing?

Dow Jones Futures 3.5.12

Well with all the talk of a needed pull back and this and that…well here’s our needed pullback. We have horizontal support around the 12,600 area (as shown in this previous Dow Jones Futures post) and even before that we have the rising fifty day moving average to catch us.

This will also give traders who have been on the sidelines waiting for a pull back to jump in. With that said though most traders are intelligent, like you and I and will wait for a bounce to initiate and long positions.

So I would recommend keeping your stops where they are if they haven’t already been taken out and do that hardest thing a trader has to do… sit on their hands and wait for the opportunity to strike.

Well it’s not hard for me to do but for some it is

What do you think will happen by the end of the week?