Will the Market Continue to Rise?

Its been a busy week and a half for me so regretfully this is the first chance I have had to talk about the market since my last post. Price action has been bullish as expected. Friday the 17th and Monday the 20th were significant because they represented a breakout above the highs of a three-plus month trading range and confirmed the positive momentum. Action has been dull since then with tight trading ranges as the market pulled back last week until seeing more buying last Friday and a push to an even higher high last night.

It will be interesting to watch what happens next. We need to keep an open mind to take advantage of pull-back opportunities. The 1100-1102 area is an eventual target and so timing a short entry correctly will be key to capitalizing on that move. There are no indications yet that suggest shorting the market, but I will hopefully have the chance to follow the market enough this week to see if that opportunity arises.

In the immediate time-frame, the 1138-1140 price range on the ES is a target. If that support does not hold, look for a further move down to 1131-1133. I am a buyer if we do get there today. If 1131 does not hold, look for a further move down to 1120 this week.

If the 1140 support holds this morning, look for a retest or a pierce of the overnight highs at 1149-1151.

No major news until GDP report and jobless claims on Thursday.

Overall still bullish. Continue to expect slow moving choppy market.

I am still traveling, but I will try and make some additional posts this week...

Time Away

I will be away from the markets for the remainder of this week. Over the next couple weeks, my posts will be sporadic as I am taking a mini break from trading as I will be on the move. I will keep tabs on the market and try to post comments when I can...

My overall view remains bullish. I think the ascent may be gradual and we will see some choppy markets, but we should see higher highs before we see lower lows...

Market Continues to Trade in Tight Range

Market continues to consolidate since yesterday's gap up. Low level of range is 1110-1112 and high level of range is at 1119-1120. I will look to buy the bottom of the range, however, if the ES breaks below 1110, watch for the possibility of trading back to Friday's close around 1103-1106. Assuming support comes in at that level, I would be a buyer there.

If 1110-1112 holds, I will look to carry any longs up to the top of the range and would expect new highs up to 1123-1125. Expect the probability of making gradual new highs as the market may just inch up rather than get any surging moves to the upside. Note additional resistance higher at 1130, 1135.

Tight Trading Neutral Day

Based on trade so far, I don't expect too much to happen today. Gap fill to 1105 is a possibility, yes, but doubtful. Market showed strength on the gap up, but other than making slightly higher highs, has been pretty flat since the open. Market is now trading down to do its typical shake out of weak longs. ES will likely find some support at 1112 and then perhaps trade back up toward the highs. The way I look to trade a neutral day is to buy the low and sell the high. And that range will likely be 1112 to 1120 or so.

We Gap Up Into Resistance

Watching to see what happens next. Considering a short, but market seems like it has higher to move. 1119 to 1122 seems like a better short at this point. Flat at the moment.

Looking Ahead to Next Week

1114-1116 on the ES is a key area. I am expecting a test of that level next week.
It will be interesting to see what happens at that point.

OPTIONS
There is potential to get a significant move down from there. You could scale into a swing short position with a goal of 35-45 points down.
If it goes against you, you can either exit or scale in another 1/4 position at 1120-1122.

The 1120-1122 area is also key. This resistance was rejected on 6/21 and for several days between 8/2 and 8/10. There is a strong possibility that if tested again, we will break through to a new high. However, we will most likely get a down-tick before it breaks out, which will enable us to get out of the previous trade for at least break even. It should make for exciting trading in any case and I am only laying out some possibilities at the moment. I will of course post more thoughts as we approach these opportunities next week.

If we do break out to new highs, we have resistance at 1135-1136 and then Gap fill from 5/13 at 1146.

One other potential move is a retrace to the low 1090s before we attack the 1115 area. If we find some responsive selling at the 1109 price point (maybe from a gap up on Monday), we could trade down to the low 1090s before reversing back up to test 1115. Just a thought... more to come...

Expect Low Volume Trading to Continue

I'm not expecting any significant market moves as today is likely to be a light-volume end to what has been a light-volume week. Relatively tight range based trading is likely and I'll be tentatively looking to short the highs (1104-1107) and buy the lows (1096-1098), waiting of course for confirmation of resting limit supply at the top or demand at the bottom.

Resistance at 1107, 1114, 1120
Support at 1096, 1088, 1082

Key Levels ES

ES December Contract

Resistance at 1111, 1115, 1120
Support at 1102, 1097, 1091

I'm considering a long entry now

Market Surges Higher on Jobless Claims and Trade Balance Data

The market used this morning's news as the catalyst to make the new highs that it couldn't quite make yesterday afternoon. Initial unemployment claims came in better than consensus estimates which helped catalyze the effort. A smaller than expected trade deficit did not hurt either. We are just trading into resistance now on the ES September contract at 1112.

Note today is rollover day, so there will be some spread trading between the September and December contracts. I will begin to reference the December contract following this post. Updating my charts now to the December contracts and will provide my key levels for the day in a moment.

Bullish

I am now biased to the long side as the ES traded down to 1086.25 in the overnight session. That is 21 points off the highs and is the first sufficient pullback in the current rally. Today could still prove to be a choppy consolidation day, but I like buying the down-tick at this point.

This is a late post, but I needed to sleep in a little this morning.

And the Initiated Move Down from this Morning Finally Continues

The market showed its hand this morning when it broke down below the key support of 1094 but proved it wouldn't make it easy to capitalize on the expected continuation. Maybe you can blame it on supplemental liquidity providers (computer based algorithmic trading from such organizations as Goldman Sachs and Deutsche Bank) adding support to a selling market or maybe it really is just an indecisive market. Whatever the case, it can be difficult to maintain conviction in a trading decision as the market seems to do what it can to make the average trader change his or her mind. As we have made another new low in the final hour of trading, it still proves difficult to get sustained selling. The gap from Friday has yet to be filled (officially at 1089.25 on the ES), though it will be filled.

Like Herman Hesse writes in Siddhartha, waiting, fasting and thinking are his protagonists three best skills. These skills make a successful trader as well. Waiting or patience is necessary to avoid making hasty decisions out of greed or fear. They do call it a virtue. Fasting can be applied to holding a position without rushing to take profits. Go without profits in the short term and open yourself up for greater reward in the longer term. Thinking is obviously what ties it all together. Thinking is what allows you to analyse the markets effectively and give you the sense and discipline to fast. To fast you need patience.

Be patient and wait for the gap to be filled. Most likely, not only will the gap be filled, but we should see the ES trade down into the 1086s.

This Morning

Friday's low is a key level this morning. Any price action below 1094 (ES) will likely result in a move back into the 1080s. This also means that the mid 1090s make an attractive potential long entry. I have actually been long at 1096 since last night but the market has just been flat. 1095-96 is a great long (if we trade back down to that level) because you can put your stop anywhere between 1093 and 1094.75 and have a pretty low risk trade with potentially significant gains. First target is 1101, then 1106, then 1112.

If the ES trades down and breaks below 1094, it will be an opportunity to flip and go short. Initial target in that case would be 1088 and then 1080.

Those are just a couple of options to consider this morning in an otherwise uninteresting market. No significant news this week until Thursday. Perhaps Thursday will present the first real opportunity to go short. That is assuming the mid 1090s support holds today...

Employment Numbers Better Than Consensus Estimates

Market Rallies 14+ Points peaking at 1103.75, 66+ points off Tuesday's low. Nonfarm payrolls and private payrolls were ahead of estimates, employment rate and hourly work week came in as expected, but the positive payrolls were enough to get people into a buying fury this morning. I am looking to initiate my short position now. I missed the chance above 1102 on the ES and I don't know if the market will trade back up there so I need to look for the next best entry point. I will post here in the comments if/when that happens...

Market Makes Modest New Highs

Market continues to maintain strength. The 1084 short would have worked out well this morning as the ES traded down over 5 points from the 1084.75 pre-market highs. We have since made new highs following better than expected pending home sales numbers. I'm continuing to scalp this market. I have yet to initiate a scale-in short trade as I feel the chances are strong that the market continues higher before offering a significant pull-back opportunity.

Having data issues today, so I won't post again unless something significant happens in price action.

I like a short off of 1090-1092 and 1098-1102

What to Expect and How to Trade it...

Market is showing strength now since rallying out of the nonsense that we have traded in for the past week. There are good resistance levels at 1078-1080, 1084-1086, 1098-1100 and 1118-1120.
We could be looking at the beginnings of a rally to 1120, so you can't get overly ambitious on the short side here. You have to plan for the possibility of trading back over the 1100s.

It is likely that we will consolidate now for the remainder of the day, so don't expect any large moves from here (though you never know with this market, we could finish the day by trading down again, but doubtful in my eyes).

There will be opportunities for short entries. Because of the underlying market strength, you have to be conservative in your targets. I will be looking for, at most, 5 points per short at the moment. We will wait for the market to reveal its hand as to when it will be a more opportune time to go for a more significant move to the downside.

We have to watch how the market trades at 1079-1080 to see how that resistance holds up. I'll come back with more thoughts as things progress. In the meantime, if I take any trades, they will be in the comments here.

Market Rallies Finally

We are now trading into key resistance. It looks like the market still has a little strength left and could push up some more, but I'm looking to get short anytime now. Waiting to see some sort of weakness before scaling into a short. Will probably take 1080, but as strong as the market looks right now, we could trade up to 1085. I will be back with in depth thoughts at how to trade this market going forward and what to expect...