Tuesday, March 9, 2010

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.


  1. took a short again here via ES and some april puts. Full position with tight stop above yesterdays high. Futures are short term (looking for retest of 1131) while puts may be a bit longer (towards Friday/Monday)

  2. cut position in half at a small loss. Not looking like its reversing here.

  3. all out again. Sigh ... so we had a 9 pt pull back that was immediately bought up.

    Sigh .... how easy and fast frustrations come back into the game ....

  4. seeing EURUSD this low again and SPX up ...