Markets looking strong after yesterday's rally to close the day. Not expecting too much excitement this morning ahead of the Fed minutes (released at 2:15pm EST). 1295-1296 (ES) should hold ahead of the announcement. Some volatility will likely follow leading to new highs. That is the time I will look for a potential swing short entry. Assuming we do see new highs in the late afternoon, I will be looking to get short as soon as there appears to be an excess in supply (i.e. more sellers than buyers). If the ES makes new highs into the close, I will look for the potential high to be established overnight in the GLOBEX session.
A pierce of the 1300 level (ES) is a likely scenario and as I have said in the past, I will confidently short the market at that level. This subsequent move down should be good for a minimum of 50 points, perhaps 10% at the most. Looking ahead, I like long entries in the 1220s (ES) and will expect the bull market to continue on from there.
What would make me change my mind about this short bias? Two things. 1) If the Fed did something outrageous, like announce it will now bail out California, Illinois and New York with QE3. But that is not going to happen, not today anyway. 2) If we get two consecutive daily closes over 1300 on the ES. I will likely abandon my shorts in that case as well, otherwise, I am a confident seller.
Levels to watch today on the ES:
Resistance above at 1295-1296, 1300, 1305-1306
Support below at 1287-1288, 1283-1284, 1277-1278, 1273-1274
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Short ES at 1295.50. Looking for a couple points here, nothing more.
ReplyDeleteCover at 1292.50 for 3 points. Part of the goal with these scalp trades is to build myself up a nice cushion so I can buy a free stop for the swing short
ReplyDeleteFOMC announcement in 15 minutes. Volatility to follow.
ReplyDeleteLooking for initial down move after FOMC with opportunity to buy ES in the low to mid 1280s. Sell that long position after we make new highs. At that point just wait till the markets calm down and prepare for the opportunity to enter a swing short. That being said, it is best to just wait till the markets stabilize a bit before executing any trades foloowing the FOMC. I am just laying out a potential scenario here. Its easy to lose money trying to trade volatility. CAUTION...
ReplyDeleteFOMC announcement at 2:15pm EST, not 2:00pm...
ReplyDeletewell, looks like we can relax, not too much volatility. Fed leaves rates unchanged and continues purchases of treasuries as expected...
ReplyDeleteFOMC Minutes: http://www.federalreserve.gov/newsevents/press/monetary/20110126a.htm
ReplyDeleteNice post. All great points. I completely agree with your assessment of the market and the possible action in the near future. I am also in agreement with you that this is still a bull market and a correction will most likely set up a nice buying opportunity.
ReplyDeleteMarket offering no signal on direction yet... waiting...
ReplyDeleteDon't want to fall for a bear trap here and see the market rally to new highs into the close...
ReplyDeletePretty anti-climactic afternoon, though we did see slight new highs... We'll see how the GLOBEX session trades tonight...
ReplyDeleteIf you cool with it I am am going to add you to y blog roll.
ReplyDeleteCool...
ReplyDelete