Wednesday, September 30, 2009

Playing along

Short update. As mentioned in the comments on Monday:

"Unfortunately for today [Monday] any sell offs should be fairly tame and stay above 1055. However, tomorrow and wednesday is key. If we remain above 1055 but close below 1060 we should have a narrow sideways day tomorrow. Then wednesday the direction will be decided in the first 90 minutes of trading."

Well the market did exactly that and should come to a decision today as I had mentioned yesterday. The question remains if we will turn higher or lower and unfortunately I have no edge today. Same ranges apply and we need to let the market decide at key ranges where it wants to go. A break of 1055 will bring us to 1018, break of 1071-1074 MAY lead to the dreaded 1100 range. We still have the 1080 to overcome so the upper side is a bit more difficult.

Tuesday, September 29, 2009

One more day for decision

Well we closed right at our key range of 1062. I had mentioned those levels previously and was quite surprised to see them reached this quickly. As a result of the fast (yet low volume) rise I have closed out more of my shorts yet again. I am currently back to less then 30% invested on the short side and will wait out the next move.

From here, it is actually quite an easy range to figure out how to position yourself. We have 1052-1053 SPX on the lower side, 1062-1067 in the neutral mid range and of course our upper ranges from 1071-1074 and the last bit at 1080.

A breach of either one of those ranges and add another 30 SPX points. At the same time we have some other important levels right at our door stop with DOW at 10K. I have seen many blogs refer to yesterdays move as a Wave 2 pattern to retrace the required 62%. I disagree with that scenario for quite a few reasons.

1) this was not a corrective move but instead rather impulsive (even on low volume)
2) if this is a W2 we have to apply the proper W3-W5 length ratios and I cannot see the market slice through those important support ranges on the lower side for this to evolve into a larger 5 wave play.

Whatever this is, whether its an ABC (to go to 1055 first and then new high) or some other type of pattern - does not matter. We have too many important ranges around us at the moment from key support and resistance (previous top and the 1040 support), emotional DOW levels etc.

So from here on - wait for the market to break out of this range before committing any real capital. There is no need to chase it and risk precious capital at this point. I have learned this lesson the very hard way and lost more then 50% of my capital over the past 6 months. Yes 50%. That is substantial and totally unacceptable. Goes to show how easy emotions can get the better of you. Its ironic that the majority of those losses came from Mid July to (the 880 overnight debacle) to now - less then 200 points of market moves - yet such a large loss. I went back through my past history and never had experienced such a large loss per SPX point. Yes its frustrating but its an important lesson learned for me. Its only money right? (lol yeah I know does not work).

Monday, September 28, 2009

Too busy with work - no update

Sorry guys and girls .... been too busy with work. Futures are working on the upper trendline. ES 1049.25 is a key range. A break here and we will see the SPX 1062-1067 range again today.

Friday, September 25, 2009

No Update

Quite busy with work today. As mentioned in the comments yesterday 1054-1055 is a key range. Break here and we see 1062-1067.

Thursday, September 24, 2009

What a day ...

Well, some light at the end of the tunnel so it seems. Quite a strong down day yesterday - however, keep in mind, we have only gone down a mere 20 pts off the peak - yes we did so with strong volume again but I continue to remain very cautious.

I had mentioned that I was not going to do any trade yesterday - well, almost, I added some more longer term puts (another 10% to the position), some oct in the money puts, and some short EURUSD. All positions are still small.

So what am I looking for now before I say "lets put some money on the table" - first of course I want to see the 1038-1041 tested. The rally off those levels is what I am really interested in. Lets assume for a moment we get to those targets (very high probability) I am looking for a retest of the 1057-1067 range. That would be my perfect bear confirmation.

I am not sure what to expect for today - could be sideways which will confirm more downside, could be another strong down day which could strengthen the fact that we are starting a real retracement - OR the dreaded scenario of dip buyers rushing in on low volume by exceeding 1067. As you remember I had talked about the 1062 levels a few days ago - yes they were breached yesterday but bulls can easily take this level back - could have been panic selling and sense will kick back in. Do not think that is the case - but as you can see, I am overly cautious here. I am short and will continue to stay short and manage my positions but not going to bet the farm on it =)

Wednesday, September 23, 2009

Short Update Again

Not much to say here - we have a potential double top. Keep in mind that our previous double tops have ultimately lead to higher prices. We do have the advantage here of having our previous October 2008 big bear gap that got filled and should hold off the market at least on the short term.

Its interesting to see that every retracement of a major top we have had during this rally has gotten smaller and smaller. 930 to 870, 1038 to 990, 1075 to only 1057. Again I have to admit the last few days seemed corrective in nature so the current upper ranges may not be the last level we reach before starting another possibly shallow retracement yet again. So we have to be ready for another bigger push on the upside that at this point is very clear with a breach of the 1074-1075 ranges. If we make it above those levels I think we have to accept the possibilities for another 40 points at the minimum. DOW at 10K is just around the corner ...

Tuesday, September 22, 2009

Small update

Not much to say here. Possibilities exist for both scenarios - bullish if we open above 1062 with high probabilities of creating a new high. Open below 1062 and we should head lower.

I had closed my oct puts yesterday, and covered my ES short position here overnight for a few points gains (ES was from the highs last week). Still have some longer term puts but not too concerned about those on the short term.

Monday, September 21, 2009

Doubts in my mind ...

As you could tell from my post on Friday I continue to question my beliefs and try to improve myself after having evaluated my performance. While this can be positive at times, too much evaluation or self criticism can often times lead to wrong conclusions and wrong changes in my trading. However, at the moment, I am questioning my key belief of where we will head over the long term - this rally has reached levels that are too strong to ignore and I am almost at the point of accepting that my longer term targets for S&P500 will be on the bullish side and not bearish side.

I keep on hearing "its different this time" and then of course the responses "its not different this time". However, what angle are you looking at it from? I know I had said it before but I wanted to restate it again.

"Its not different this time, its just a bear market rally and we will continue to drop"
"Its not different this time, we had an 18 months recessions and we are entering a new bullish cycle that will be here with us over the long term, just like at every other previous recession"

Both of the above statements are correct and are solely based on the context of the person evaluating the markets. What is more probable at this point? I have to be honest, regardless of whatever pull back we are going to get, or whatever sell off will come. Our key moving averages are sloping upwards, we have broken key resistance levels, the market has not had a single pull back that did not get bought. Many long term bears have covered. This is looking more and more like a new start to a bull market or at least a bullish cycle. Even all the way down to 870-880 this is still mid to long term be-long market. If for some magic reason we will get back to 880, which is quite a way from here - who would not be a buyer at this level?

So at this point, my BEST case scenario is a pull back to this level as the "double dip recession" scenario I had described last Friday.

The other thing I wanted to mention is perception. The current perception in the market place is buy any dip, pullbacks are shallow and can be bought without much risk. So the past 6 months have totally changed many traders attitudes. I think it will take a lot of changes to be able to make traders change this again. I have played around this weekend with some "proprietary indicators" - what I mean by that is an algorithm that helps me identify how I should position myself - while those are lagging indicators I will share some of my basis some time this week so you can see where I am coming from. A lot of this "research" is based on the above perception I was describing and should help me going forward to play the market more effectively.

Ok back to the markets - futures are down a bit and we broke a key support range overnight. Lets see how it behaves by the time we open for cash hours. Many are looking at 1049 ES for a low risk long position. Lets see what we can do there. Will post more analysis in the comments before the open.

Friday, September 18, 2009

What to do from here?

Well, I am excited, our second down day in 10 sessions. Thats what? less then 10 points down on a close basis after having rallied well, 80+ points. Being a bear is quite difficult =)

Now we did something very important yesterday - we filled the BIG gap we had from october 2008. I would have NEVER in a million years imagined that we will make it this far. If you had told me in march that we will be filling this monstrous GAP I would have told you to stop trading and put your money into a CD. I wish I would have done that =)

Ok now lets see what the market wants to do from here - as we all know down GAP fills are bearish, while up gap fills are bullish. I have always said that the market can easily be analysed using technicals after the fact. Here its one of those where we have to ask ourselves what we will be saying in a year from now - did we fill this GAP to continue with the big bear, or did we fill this GAP to go on our quest for new highs as part of a new bull market.

The strength over the past months have been anything but bearish, forget volume, bull markets are not based of volume but price (ok blunt statement but lets ignore that for now). Yes we are wedging, broke out of the wedge on the upside (which is bearish and indicates a reversal) however this does not look, nor feel like a normal bear market rally. Any bear market rally is filled with hesitance and swings back and forth. This did not occur here and we have had month after month with advances. The market is now setup perfectly for a double dip scenario, not to the march lows but to the strong support in the 880 range. Moving back to this range will actually be healthy and most likly mark the final stone for this new bullish cycle that may last longer then I would have imagined.

Yes I am still bearish overall - but there was an interesting comment I read the other day on Slope of Hope. Are we traders or are we economists?

As an economist in times of uncertainty you distance yourself, let the data and information play out until everything is absorbed and the direction has been decided. The economist will re-enter the markets once we can be certain that the decision has been made.

As a trader, well you trade the technicals and follow the trend. I always considered myself a trader but I have fallen down the road of mixing my trading with the information an economist uses to make decisions - why is that? Well quite frankly I am disgusted at how the public is being sold on the problems being solved when it is quite clear to us, who are exposed to the actual data on a daily basis, that its not the case. As a trader - I should not care about this? I should care about where the market will head tomorrow based on technicals. This rally here has taught me something else - my identity in relation to the markets. Whenever I put money into a short or long - am I doing it as a trader or economist? Well quite frankly, I did not do it as a trader during this rally. Time to change.

So in summary - ask yourself - who are you? What is your identity?

Thursday, September 17, 2009

Yes you guessed it - another new high

Well as I was having my breakfast this morning I decided to get some orange juice - as I am pouring the juice into the glass I hear the dreaded sound of "order filled" coming from my laptop.

Yet again I have fallen for a stop run as the advance was reversed right away with me being taken out of 50% of my position. I had PROMISED myself to not hold any hard stops during overnight hours as I had been a vicitim of such moves many times before - with the strong moves of the past week I had decided to put at least a partial hard stop in case we get a runnaway GAP for the morning cash hours. Nothing you can do about it ...

Lets see what the rest of the morning brings for all of us. It would not surprise me to see this run another 25 points on the upside from here before we finally start a retracement of more then 5 points.

Wednesday, September 16, 2009

At the expense of sounding like a total idiot

Well, this here does qualify for a blow off top. You remember I had mentioned it in the comments a few times that I was looking for one last big FAST push of at least 15 points - market going parabolic here ...

Not much you can do as a bear to be honest - just sit and wait, or feel pain if you are already short - I am sure many have scaled out quite heavily here and are either out or just watching. While I have some shorts here its more a watching type of position for me as the exposure is quite small.

The last 2 weeks - just amazing, feels like July all over again.

And another new high lol

Well, not much more to say, yet again another high. It seems after we make a new high, this new high quickly becomes to support without even being broken on the downside.

Post just meant as a holder for today - mentally exhausted and really just waiting to see once we reach SPU 107-108 before I can make any clear directional calls.

Tuesday, September 15, 2009

Another new high

Well the market does not seem to want to stop. High after high on lower and lower volume. Well the only positive thing from here is that it will eventually stop and we get a bit of a correction. There really is nothing more to say at this point - we have to wait until this market unfolds itself. Yes its unfolding to the upside but going long for more then a few points is not the way to go.

I am still in some longer term out of the money puts that are showing more and more signs of "well Chris what were you thinking". Since those are quite long term 3+ months out I am not getting affected as much by the decay. I will probably look for a chance to add my last chunk here again pretty soon. We have reached the GS predicted high for SPX but it seems we have a big GAP to fill first.

I will put up more sensible comments once the market behaves a bit more normal - normal in my views. Yes others can make sense of this market, I would prefer to stay away and let this move here complete first.

More comments to come of course before the open and for the first few minutes. Scenarios for today would be a nice follow through from yesterday with another 10-15 points to add in the first 90 minutes of trading before finally reversing. Lets see what the market wants to do here.

Monday, September 14, 2009

Overnight woes ....

Well yet again the market is showing us that any correction to the downside happens in non-tradable hours. Of course this could all reverse back by the time our cash hours open but as I am writting this futures are down 8+ points. The biggest correction we have had since our tests at the 991 range and only if you assume the risk to hold a position overnight will you be able to have the promise of profits on the short side.

Last week was quite odd in terms of technicals, we had great strength in price, new closing highs for the year for many indexes, new intraday highs and price above key support ranges not just on a one time basis but consistent closes higher. As you remember a few weeks ago I had mentioned that the breach of the 1014 is the door to higher prices. What has me really puzzled from last week is the fact that prices showed such immense strength but volume was non-existant. Considering we had such a strong sell off as we came out of the 1018-103X range at the end of august we have not offset with an equally strong accumulation day (buying day). Now of course this does not have to happen right away but as we are making new highs we need to come in with new buyers. I dare to say that the rally over the past week has been primarily fueled by short sellers that went short after we had our one time wonder sell off and had no choice but to cover as we made yet again another higher low.

From here - I have to be honest, I do not know what to expect and would rather not try to make any longer term directional calls. I will continue to look at the market on a daily basis and try to profit from short term moves. I do have a small percentage of my cash in IT positions but those can be closed out without much pain. Its OPEX week so lets see what they have in store for us. Regardless of price, even if we drop 50 points from here I will not use this week for any IT position changes or additions. No matter what price action we see, I will wait till after opex to get a confirmation of such moves and follow through on whatever happens this week.

I wanted to apologize for being away a bit during the past few days and weeks. But I think I can speak for all of us that this market has been exhausting for any bear. I will put up more info as I see the morning action unfold to figure out where it may take us for the next 2 days.

Thursday, September 10, 2009

Updated Chart

As you remember this chart from a while ago ... the one that will haunt bears for a while ... We just touched the lower trendline here. Though this is a longer term chart so remember, there is at least a 20 point buffer in there in case my trendlines are not 100% accurate (or off by a point somewhere causing it to shift quite a bit).

One thing that is still puzzling to me is the volume - we keep on declining in volume even as we make new highs - are new buyers coming in? Nope everyone is invested and happy that they keep on making more money. No need to buy more if your buying power is exhausted. And what fuels those rallies are us bears - look at that nice jump there with the stop run. Tick was pretty darn high at a mere 1 million spy shares.

I increased my short exposure here a little bit but not by much. Closing above 1040 and I may get out 100% and wait for another time. Same old story - more money to the bulls from me (and my broker).

Where is ze volume? (again)

Well there is not much more to say. Market keeps on defying sense and technicals. We went straight from 991 to 1035 without a single stop in between. Now something that has been interesting the past few days is the volume again.

We are able to continue to drive prices higher on lower and lower volume.

Now this chart is a bit subjective - however, if you see on any previous pull back we were able to match the daily down volume from previous sell offs or exceed them. I circled previous pull backs and the following rallies in green - as you can see volume has been able to match the down volume or exceed on most occasions - now here, look at the difference from the sell volume earlier last week and compare it with the follow through - this is absolutly dismisall. We are inches away from the high of the year, have a new closing high on many indexes but not a single bit of follow through with strength. Price shows strength - momentum shows weakness.

Futures are already working their way up by having retested previous year highs but are coming off those highs now. Looking at the above chart, volume continues to decline as we move higher in prices. We have been saying this for many months now - and I keep on referring to low volume yet here we are again at the edge of moving the market higher into a new range on the upside. How much lower can volume go? How much higher can we go at those volume levels?

Tuesday, September 8, 2009

All cash now

Closed out ALL positions. Yeap, no more puts, no more ES, no more ETF's. All gone. I am happy on one hand, and concerned on the other of course. Whenever you close out a position in the loss you have been building for weeks, you get this emotional feel of being afraid to miss the drop.

I should have held to my quote on the right hand side - do not get married to a position, and well, my mistress was Mrs Short for the past few weeks (and months). Of course nothing has changed for me, I am going to continue to watch the market for a short entry, turning bullish is not for me, not after such a strong rally even if it means we go to 1200. Not going to have any part of it.

I will probably be a bit away from the blog the next few days as I get my mind clear and detach myself from an emotional roller coaster ride of the past 6 weeks.

But trust me, will be here daily to check up .... now let the markets drop as I have covered it all =) you know how it goes. You may use me as your new bear market rally end indicator.

Comment Cleaner

Will try to get a post in before market open. SPX fair value saw a nice ramp up yesterday and our 1012-1014 has yet again been broken on the upside. I had said last week that this pattern is bearish all the way to 1021 and just now we hit 1025.

The big move however, is in EURUSD, 3 days of strong moves higher and currently above the highest close for the year. I am glad I made the right technical choice and close out a lot of my short exposure on friday. Wish I had done more. I will be looking to minimize my exposure even further at the open as we can count with a nice 1% GAP that should resolve in a stepping day. Lets see what futures will do before the open but I doubt we see any downward pressure especially with EURUSD making strong moves like that.

Friday, September 4, 2009

Position Update

I did exactly what I was describing earlier - I gave in to the Market Makers and allowed them to get those puts back for super cheap.

- Covered ES around 1012 (this was the position I had been holding for over a month)
- Also exited 50% of all my puts here
     - exited september at 10% loss after being up 100% - yikes
     - minimized my oct 95 and dec 85
     - picked up some more of the mar ones though

If it were not for the long weekend I would have kept most of the positions, but not going to take this risk here.

My main reason for exiting is that I am exposed to max pain, meaning, my positions are down more this week at much lower prices then they were last week. Its a bit of an emotional exit I have to admit, will probably regret this exit but it prooves yet again, do not trade during holiday week. Considering how much I had been up early week and to close out now, without having taken a single profit - I am quite frustrated as you can see. Sorry guys, just been a bad week for me and I need to vent somewhere.

Cannot believe that I was up amazing on monday and now see myself down more then I had been at the worst point last week. Someone tell me how that is possible :(

All eyes on data

We continued trading in a narrow range yesterday after we failed to take out the 992 support range. I have to admit I was a bit surprised at this action here and would have expected at least a marginal new low but that did not happen.

As the market turned around it was clear we had to brace ourselves for a bit more upside. Usually I am pretty accurate with price points and levels but yesterday was one of those one-hit-wonders.

At 12:59PM I had posted the following in the comments section:

"100.77 on SPY is as high as it can go, even if it breaks out to the upside on that triangle. Not higher. Putting my foot down !!!!! Now market you listen to me and do what I say ...."

Well I guess the market listened, high of the day right at the close was 100.77. A bit lucky I would say but also inline with my other comment around 11:47AM.

"Based on what I am seeing here, sustained rallies above 1000 are very unlikly. I would not be surprised to see one last push up to 1003-1004 and then fall very strong."

Well we got that one too, HOWEVER, this happened into the close which makes all of this a very bullish scenario. Considering that we closed above the open price this pattern looks very much like a bullish reversal pattern.

Well the morning at 8:30 will decide the day. We have to accept the possibilities of a trend day today, I know any rally in the past 2 weeks had been sold into, BUT for today, if we get good job numbers I expect a minimum of 8-10 point gap with a stepping day closing at the highs or with a marginal sell off into the close above the open price.

The other scenario of course a GAP towards 998 or more with continued selling and possibly reaching 980 with a marginal breach towards 978.

Position Update
I had positioned myself last week through what I consider my max pain zone to profit from this move that happened this week. My price and time targets are still at a minimum 960 by OPEX, however, due to the premium drop in all my puts my max pain zone has dropped into the 1010 range (1019 before). Thats a whopping 9 points of additional pain I have to assume - not something I am prepared to do.

FYI I have not taken a single profit on my positions yet (hindsight is 20/20 but when it comes to options, its always tempting to close out before your time/price targets)

So it will become quite difficult for me to manage my positions here. I have to accept a rally towards the 1012 range, possibly even ranging to 1016. This is the max pain zone based on my positions, however, purely market based this is still a bearish pattern all the way until 1021.

So as a result I need to do some extra work to make my positions work. I have not yet decided how I want to play this protection. Either through a large in the money call for the intraday protection or a large futures long position via NQ to offset both the loss on ES and the puts.

More updates to come at 8:31AM lol

5:32AM: ok futures being pushed with a high of 1007 (just at my 1008 range SPX). Could be adding a nice buffer here on the upside for a potential drop on unemployment data. Combined with the option trickery (whether it was valid or not) it has all the makings to protect big money for downturn. Also interesting to note that EURUSD is not confirming this move here, it did not confirm the mid day rally yesterday (made lower highs and lower lows) and not confirming the push here on futures. If the data is positive and I were out to screw market participants I would run the long stops by dropping futures to make bears happy (and screw them with good news) and to make dip buyers chase higher and higher prices with the hope of going even higher. Ok enough of this conspiracy talk - the market does what it does and is not out to get anyone here. Whatever your position is (short for me) I can always dream up a case when the market moves against me to justify staying in the positions.

Thursday, September 3, 2009

What to expect for today?

Market took a breather just as I had mentioned yesterday for us traders. I was pleasantly surprised to see the hesitation around the 1000 mark. Based on yesterdays price action a rally towards the 1012 becomes more unlikly but is not out of the picture yet. We just breached the intraday high during our overnight session here but quickly reversed back into yesterday cash hours range.

Many are calling for a stronger rally at this point that will bring us back well above the 1000 range possibly even reaching into the high 101X. I have to be honest, if this was the top last week we should get ready for more downside with minimal retracements at least on the short term until the first round of selling completes, if we end up having a strong up day today or tomorrow bears have to be very careful - yes we had a textbook reversal on many charts but we need to remain cautious.

As I have quite a lot of options in my open positions I have to be extra cautious and make sure I forecast my time windows correctly - otherwise I may end up leaving a lot of money on the table.

Position Update
I am still in all of my positions, ES from an avg of 1012 (I had closed but re-entered at same prices last week around the 1031 range but the real avg is 1012). Also have all of my puts still - Sep 100, Oct 95, Dec 85, Mar 70, Mar 65. As you can see I am playing multiple time frames with my expectations of further downside on the short term.

I will be looking to enter quite a large hedge at some point today - my perfect scenario of course would be a long position in the 980 range but based on this overnight session we may not get the chance and have to use yesterdays low as a guide if we even get there. I will post more updates before the open as I see the overnight session play out.

Current exposure to the short side is a little below 45% of cash - so I still have quite a lot of buying power left that I want to deploy after the first move. At this point I only have futures and options committed, keep in mind my option exposure is quite a bit smaller in relation to my cash balance (well options are scary if you are wrong). So in summary, I am still very cautious to play the short side due to the last 5 months of bear trickery.

Trade Lesson/Rule - Hedging
I had made a large post about Hedging yesterday as part of my trade rules. Keep in mind that my hedging strategies are still my weakest point but I had put in some rules that are quite important to me, especially the hedge during trend days and the hedge is not a trade rule. Let me know if this helps anyone out there =)

Wednesday, September 2, 2009

Well what a day

I was a bit too exhausted yesterday to post an update, but every other blog in the universe has been making big reviews. I figured you guys and girls had enough to catch up on. I am pretty sure every bear that exists has come out of hibernation at this point.

So, lets all calm down here and not chase or overextend ourselves. We need to give this first move a chance to unfold to see what this bad boy is made off. Of course the first move I expect is a move towards 980, however, we are not out of the woods yet, we have had a lot of selling with STRONG volume but lets not expect this strong of a sell off to continue on a daily basis.

As mentioned, lets see this first move play out first before making any targets. I personally have a target of 906-913 for our OPEX week but this could easily stop anywhere from 930 to all the way to 965. So lets not get too excited and wait a bit more.

Now the one thing I have been wanting to talk about is support. This has a very high chance to be the ultimate downfall for the bulls. We have had an amazing rally in the past 5 months but we have only one strong support range, the 870-880 range. Support is quite tricky as you have to seperate between strong and weak support. When support is build as part of an uptrend through small retracements that support range is rather weak and can easily be taken out through profit taking, causing even more profit taking to occur. During our rally we have only had one significant move of the highs when we had retested 880 before our strong rally up. We do have some decent support at 930 but other then that all other ranges had not been properly retested through a strong retracement. The majority of retracements had been part of a typical W4 rarely ever exceeding the 23.6% retracements - those are not support ranges but merely were used to consolidate and remove technical overbought indicators. Those consolidation zones cannot hold up when strong selling occurs and can only be used as intraday guides to take profits or hedge. If we have seen the top of this rally here, it will be quite difficult for the bulls to use those weak support ranges as buying opportunities that will last more then 3 days.

As you remember I had talked about the important FIB 38.20% range that we had broken through - while we are currently in the making of a PERFECT textbook reversal this break will haunt the bears for the many weeks and months to come. So inline with my above support comments, we still have to be cautious of the potential of higher prices this year.

So at this point, for us bears, we have to let the market show us what it wants to do, yesterday was an amazing sign and my account balance was quite happy as the pain I had taken the past 2 weeks had finally paid off. Next target 980, lets see what we will do there.

Tuesday, September 1, 2009

Overnight Action

Well we are seeing quite a bit of activity here during the overnight session. Going to have to figure out exactly what happened here but we have broken yesterdays intraday low just now. Of course I have a big grin on my face as it means we are nearing the 998-1008 range where we will put this puppy to a test. A break out of last weeks trade range especially with the weekly GAP down makes for a nice weekly exhaustion gap that immidiately got reversed.

Are we finally getting that overhead supply I have been talking about for oh so many weeks now at the 4 digit range. It seems the immense pain I had to sit through the past 2 weeks are turning into my favor. Lets see how it will unfold during cash hours today.

Will post a more detailed update before the cash hours open after watching the futures unfold and show me more direction. Another GAP down here could lead to quite a strong trend day. We had a trend day in the making yesterday but did not manage to pull through as we lacked volume.

Its quite ironic - everyone (including me) expected, and is still expecting the first "holiday" week of September to be quite tame with an upside bias. Maybe its true, the market does the opposite of what most people expect. Even xtrends has turned cautious - the first time I am seeing this kind of "throwing arms up in the air" type of attitude. Of course he is giving proper justifications but from a sentiment perspective - its really just a fact to support the current dilema all bears are in - what the heck is going to stop this madening rally.