Friday, February 12, 2010

Frustrating Market (at least for me)

Emotions + trading = bad combination

I am not sure about you guys but I am quite frustrated at the moment. Of course the biggest issue was missing the drop after being bearish for most of the run up due to work. Drop finally comes and this bear is not on the bus (yeah it almost sounds like its from a book).

"It appears the market is waiting for cash hours to try to induce a rally and then possibly run some stops (maybe mine) on the upper range. We are still close enough to jump to 1076 by 10:00AM. This would put a lot of shorts under a lot of pressure - primarily talking about more longer term committed positions that may need hedges above those range or potential partial covering."

I had commented on this yesterday on the post and voila - looks like that scenario unfolded but in a different time pattern. So market breaks out, does NOT sell off after reaching the new range and closes at the highs. This of course lead to a new range expansion bringing us back into the 1076 to 1102 SPX. Well, looking at the futures now and EURUSD - we may be going for the move that I had been positioned for since wednesday - of course only after giving us a false breakout above and running said stops lol.

Now of course this is not guaranteed, but looking at ES at the moment we should see more downside before cash hours giving us a potential stepping day down due to an open 1% outside of previous close.

On the other hand, we made a higher high and if we remain above yesterdays low we would also be putting in a higher low. I am giving this scenario less then 30% chance at this point due to the pressures we are seeing on currencies. End result again, this bear not on the bus.

Price action purely on ES dictates a move towards 1095-1102, my personal opinion based on charts and other components I am seeing indicates failure - but too late to chase it now as you have to assume a stop above yesterdays high. Not willing to take this risk at the moment even though I am giving it less then 30% chance (so maybe those chances are a bit better then I want to make myself think).

To throw another scenario on the table, we have seen a lot of sideways action here absorbing selling pressures, so IF we are to end up at last week lows again volume will be a key indicator. It is very possible that we end up testing it on lower volume brining in more buyers to then re-attack the 1102 range. While this is possible, it is unlikely and revisiting the lows should bring more selling. The main reason for additional selling is the past 5-6 months of buyers that got sucked in looking for a way out. We have seen the first wave of emotional selling but have not gone into panic mode - a retest of the lows will put more pressure on bulls.

Ok enough for now ... 100% cash and frustrated !!!!


  1. I assume everyone is just waiting to see what happens here at 1100 before making any further bets.


  2. yeap I am in the same boat - just waiting at this point. So far ES is doing what we assumed would happen on the break of 1076 (1080 SPX). However, in my previous post I did talk about a potential for 1118 to retest the previous months range there.

    What really has me more and more concerned is the EURUSD, once it reaches the point of a bottom (that I thought had been formed already) any rally there will bring SPX with it. If that scenario holds true the carry trade will be able to take SPX to the 1217 levels I had been talking about a while back.

    I am still not sure what the market is up to .... too many scenarios and confirmations of the major moves are too far out in terms of price to make a low risk long term bet.