We are currently chopping around in the 1160-1165 range on the ES. You can consider buying the lows and selling the highs (i.e. highs being 1164-1165 and lows being 1160-1161). Be careful though if we trade below 1160 as we could see further selling down from there. If that happens, more support should come in below at 1157-1158. I like shorts at the top of this range. You shouldn't face much danger in the event you take some heat on this move. However, if the ES trades above 1167, you should think about getting out of the trade.
Eventually we must break out of the range in one direction or another. I think we will break lower before we break higher, but if we do break lower, I do expect opportunities to get long as we find support underneath. I won't look for more than 1 or 2 points on these types of trades.
Monday, October 11, 2010
Is Market Beginning to Look Good For a Short Play?
I have been talking about the market moving up into territory that is ripe for considering a short play. I continue to believe this, however I am not going to just blindly get short here without considering market conditions. I will wait for a signal before I attempt to simply pick a price.
The S&P 500 is approaching the highs that followed the flash crash from may 6th. In overnight trading, the ES actually came within 3 ticks of the post crash highs of 1165.75. Dow Futures or the YM has already traded above its post-crash high of 10,792 and is currently trading 1.5% higher. Dow has been trading above since 10/5. The Nasdaq is also trading above its post-crash high and has been doing so since 9/20.
On that note there is no reason to simply assume the S&P is not going to continue above that level as well. After the weaker than expected jobs numbers from last Friday, a common belief is that the Fed will implement stronger quantitative easing going forward. This is typically positive for the stock market. So shorts beware and be very careful entering any sort of swing short position.
The S&P 500 is approaching the highs that followed the flash crash from may 6th. In overnight trading, the ES actually came within 3 ticks of the post crash highs of 1165.75. Dow Futures or the YM has already traded above its post-crash high of 10,792 and is currently trading 1.5% higher. Dow has been trading above since 10/5. The Nasdaq is also trading above its post-crash high and has been doing so since 9/20.
On that note there is no reason to simply assume the S&P is not going to continue above that level as well. After the weaker than expected jobs numbers from last Friday, a common belief is that the Fed will implement stronger quantitative easing going forward. This is typically positive for the stock market. So shorts beware and be very careful entering any sort of swing short position.
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