Long time no update

Well we finally hit 1180. Been taking some time off from the market and only been dipping my toes. Additionally getting ready to finally head back home to Miami.

Now today - I will watch the first hour very carefully. What I am looking for is a strong move higher on ES towards 1169-1171 and then a reversal below 1165 within 15 minutes. If that will occur I will be adding shorts, on a break of yesterdays low will be adding even more. We need to close today below yesterdays low of the day for this to develop into a sell off - sideways move after a strong first 45 minutes will likely result in forced covering from 2:30PM and more buying to bring us back towards the highs on Monday.

So today is quite important. I will be giving updates on position entries in the comments. Its very likely that I may go cash again towards the end regardless of profit/loss.

Vacation

Well, first time now in over a year that I am taking time off, a total of 2 days wow. Maybe 2011 I will take 3 days.

Good luck during OPEX next week, will be back on Wednesday. Have a good weekend all.

Simple Question: who else is tired of this market?

Important Day

Yesterday was quite an odd day. When talking about standard deviations yesterday was way outside of the norm in terms of volume. During the month of January we have seen the highest volume in quite a while during our sell off, of course on the flip side the reversal day at 1040 was quite bullish with extremely high volume stepping in recovering from the lows.

Considering that we are moving back to our previous highs of this amazing rally but reach this point with extremely low volume one has to be careful. We have a few bullish factors such as the break above the 50% retracement (1121) but no real follow through. If the market is moving back below this range by wednesday we have a very high potential for a failed break and more selling should step in. On the other hand if we remain sideways with another attempt at our previous high that are just inches away it opens the door to put 1150+ back on the table.

So it is very important to watch price action around 1130 SPX, we have enough of a buffer to absorb selling all the way to 1118 and manage a reversal there or a recovery the next day. Closing prices this week are very important. Additionally many key sectors are forming finishing patterns either as part of wedges or pennants. Looking at VIX daily, we are at the previous bottom and ready for a bounce, at the same time a break here will open up a new range on the downside yet again making more room for SPX.

The good old analogy that always seems to work for bears, looking at where we are now, we are seeing extreme weakness, even more then our previous high back in January. However, being broken and hurt like many it is very difficult to try to commit here.

Just one quick chart of EURUSD - on the edge of completing a continuation pattern or the first step to a break out. Why do I put my money on continuation? Bottoms are events while tops are processes - the support we are seeing in EURUSD is not an event and appears corrective and not impulsive - meaning, more downside - as unlikely as it may seem from a technical oversold perspective, charts do not lie and it points lower.

SPY Volume

Wow just wow, the last time we had such a low volume day was towards the high of the year thus far on Jan 11th. Excluding the holiday trade schedule, this belongs to one of the lowest volume days in over 2 years - when I say one of the few, talking about being able to count those on one hand.

When looking at standard deviations, this is very far away from the norm. Will be doing some charts tonight as this is not normal after such a strong day on Friday. Will have more answers tomorrow ....

EDIT: ok bottom 3 lowest volume days in over 2 years. I'll count out the exact dates some time later and what happened thereafter. Either way, still going through charts to figure out what may be in store for us next.

Back to Square one so it seems

Well my first real short attempt ended yet again with failure. The market gave us a clear picture so it seems based on Fridays price action. There was no profit taking, no reversal after hitting a key resistance level.

As a result, higher prices are likely again, with minimal or shallow corrections that will get bought. The market really had its chance to start a bigger correction or what I consider a resumption of the bear market - it is clear now that we have to wait a bit longer. Does not mean we cannot see lower prices, but the market needs to play itself out on the upside first, before we can make a new call, yes we have the double top as a potential turning point but I only see this as a shorter term correction to go to new highs. The final target now seems obvious of anything from 1180 towards our 1217 target that we had been talking about a few weeks back.

There is a chance for more downside this week but I would expect 1118 to hold and give a chance for many to scale out of shorts, hedge or minimize risk overall.

EURUSD is trying to create an uptrend but every attempt higher is being pressured by the declining trendlines so this still appears corrective in nature for new lows to come, however, we do need to work off some of those oversold conditions here on the longer term charts so I would not be surprised seeing another week or so of sideways moves. This should help SPX move higher. Regardless, both the FX and equities side have interesting charts and patterns that make it difficult to make any longer term calls with great confidence.

Stay nimble and stay small still seems the way to go. At least for me =)

Short - Biggest Trade Since Nov 09

As some of you remember I had minimized my trading capital by a large amount and been using a much smaller amount for my trades since November 2009 due to my 2009 losses.

Well today I made a slight adjustment, I went short at the close with a fairly large amount via ES futures and SPY puts. This is the largest trade for me since November 2009. I am treating this as a special case here due to charts, patterns and probabilities. Risk/reward was very favorable at this range and I could not resist so to speak.

A bit of a decision now

Well market has a bit of a decision to make at the moment. Head and shoulder over head, triple bottom below. What will it be? I am still positioned short with stop moved above todays high. Even if we go lower here and break the tripple top range, look what happened the last time at 1092 ES, broke lower after some narrow back and forth just to give us an amazing reversal higher.

We have quite a few divergences, especially with some sectors making new annual highs or getting extremely close to qualify for a retest. EURUSD going lower after testing the upper trendline peaks from Feb 9th and 17th. So both could go lower here.

On the other hand, tick only got a -831 in today and that second LOD was made on lower volume. The bounce here was obvious - the question now becomes if its a bounce based on tripple bottom support to go higher? Or if we head lower. We have spent enough time to work off overbought conditions to give us room for a run towards 1130+ without pull back. Just on the flip side we can now absorb a strong sell off and still manage to keep 1110 as key support as we have enough buffer.

The more and more I say the more we can all see that it is extremely difficult to try to get a position for 20-30 points ....

Frustrations are high everywhere

It seems no matter what blog I am visiting now - everyone seems frustrated or in revenge mode. Seeing statements "I am not going to let them get me", "I am all in and not closing out" - just goes to show what traders are feeling of this market.

Thus far we had one of the tamest overnight session on ES in a while, but we have a few more hours to screw both sides bulls and bears. A market like we have now is almost impossible to get positioned in. Big moves happen either overnight or in very short time frames during cash hours around news events. By the time cash hours hit 11:30 all major moves have been made and traders get the shaft. Unless you pick a side, gamble and assume a wide loss you are not getting a piece - and even then you will get shaken out the majority of the time. Some are able to make some profits in this difficult markets but I dare to say those traders can be counted with one hand.

For me its quite simple, stay small, with tight stops around positions, and get out as soon as I see the market not moving in my direction. I have not made any money in February and it feels like a victory - just because I did not loose anything either besides some commissions - is this my new market relationship?

From a directional perspective, I have to admit, this is looking very bullish, double bottom at the EURUSD (tripple bottom now). Even if EURUSD remains sideways for the next 4-8 weeks it means higher prices in SPX. The FX to SPX relationship works in the markets favor when dollar is weak, but detaches when dollar is strong - amazing hands in this market to be honest. I am not talking about manipulation, just the fact that we see strong divergences on the currency side that generally has some type of effect on the markets - but not in these times it seems.

Regardless of where we will be, I had mentioned a few weeks ago it would not surprise me to remain in this range bound uneventful state until summer. Now the one thing we have to keep in mind, the market is working off long term overbought conditions (weekly and monthly) by trending rather sideways - if this is to continue a few more weeks and months we could be ready for another stage of upside.

I am not really saying anything about direction here - just general statements about sentiment and what I am seeing in the blog world.

X - Short

Also took a short in X - filled the GAP here @ 54.50. This is just a short term position, with a fairly tight stop, it had quite a run up today so rather not stand in front of that except at serious resistance.

Entry is 54.47 =)

Trying another short here @ 1114 ES