European and Asian markets down again (though the Shanghai Index is up half a percent), US Futures were trading under 1300, but have seen a bid following jobless claims data. Jobless claims showed improvement, but were below expectations, so it is interesting that buying has come back in. Question is, can it continue?
The ES traded all the way down to the 1293 support during the GLOBEX session as oil futures were bid up to new highs overnight.
Levels to watch today on the ES:
Resistance above at: 1310-1312, 1317-1318, 1323-1324
Support below at: 1299-1301, 1293-1295, 1290, 1285-1286, 1277-1279
Additional Points of Interest:
1) I mentioned in a post last Wednesday that transcripts from the FOMC minutes acknowledged that some Fed members believed that QE2 may need to be tempered down. This sentiment was echoed in a quote yesterday by Federal Reserve Bank of Philadelphia President Charles Plosser:
He said, "Should economic prospects continue to strengthen, I would not rule out changing the policy stance to bring QE2 to an early close."
Quotes like that probably won't help to strengthen the markets in the short-term.
2) Amidst global unrest, dollar not performing like the safe haven currency it has been in the past, though money has flowed back into US Treasuries. Other safe havens seem to be the Yen, the Swiss Franc, silver and gold.
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Volatility is back... Time to get re-acclimated
ReplyDeleteConsidering a short in the 1310-1312 area.
ReplyDeleteNeed to be careful as it will be a new intra-day high and has the possibility to break out further. In this volatility, you can't get away with a few tick stop and break outs are moving much faster than we have become accustomed to of late. Risk is greater. Proceed with caution...
I'd like to share a trade that is one of the most frustrating kinds. I got short ES at 1307 earlier today. I was looking for 5 points. ES came within 2 ticks of my target. Support held. I then tried to get filled at 4 points. Ticked on my price, but no fill. I held. ES kept ticking up. I tried then to just get 2 points. Again, No fill. ES goes back to 1307. I had a stop at break even. I tried to remove my stop, but I got filled for break-even. ES has now traded all the way back down to my target. I didn't get back in. I was a little angry, so I decided not to trade since it is easy to make bad decisions when I am emotional.
ReplyDeleteI am over it. Waiting for the next opportunity...
Verde - Are you using market orders or limits to get in and out of your trades? It makes no sense that you cannot get filled??
ReplyDeleteVis
Vis, if you have not had the experience of not getting filled with a limit order, sounds like you are trading a simulated account. With a limit order, you get placed in line based on when you place your order. It is tough to compete with the HFT algorithms as they are much faster than we can ever hope to be. They almost always get their orders in ahead of us and thus get filled ahead of us. If 400 contracts trade at X price and I am number 401 in line, I am not going to get filled. I don't use market orders unless I place a stop. I don't use hard stops in general, but I happened to have one in place on that trade since I was already significantly in the money.
ReplyDeleteI know exactly how limit orders work and no I'm not trading a sim account. The point I was making was that if you were in at 1307 and let it go to 1302 and the limit didn't take you out, then just hit the close or flatten button and let a market order take you out. There is no point letting a 5 pt gain go to waste just because you would rather have a limit take you out vs. you just taking yourself out with a market order. Yes, the majority of the time I use limits to take me out but in situations where I'm in the money and the limit didn't fill, I will close with a market order to avoid losing that profit. I've noticed that you have been in quite a few trades in the last few weeks where you were in the money only to wait, and then lose money or just break even. Not a smart way to trade. The only time I ever use hard stops are if I'm already in the money and am just trailing my profit with the stop. Forget HFT algorithms as you can be in total control just using market orders when you need to. You have to "feel" the market and not try and be so mechanical about it alot of the time...
ReplyDeleteVis
I hear you Vis, The events of that trade were a rare occurrence, it can happen and because it did, I wanted to share it.
ReplyDeleteDidn't mean to offend by suggesting you were trading a sim :)
Long ES at 1293.50
ReplyDeleteNo defense now
ReplyDeleteSell at 1298
ReplyDeleteShort ES at 1304. No defense over 1305
ReplyDeleteStocks rebounding on Rumor that Libya's Gaddafi was shot. But it is only a rumor. I am holding this short in the event we sell back off given that news is not confirmed...
ReplyDeleteCover trade at break-even.
ReplyDeleteNeed to entertain the idea that today's low could be a bottom. A continuation up tomorrow off today's low will be bad for the bears...
ReplyDeleteGood (if you are short biased) to see that the rally didn't continue up and through today's high. Market still has to be considered weak... for now...
ReplyDeleteIn the end, today was flat, but volatile.
Final comment... What a day! Kudos to anyone who didn't lose money today. Trying to day trade action like we saw today is very difficult...
ReplyDeleteJust got back - No problem Verde - No offense taken at all... I just want to help any trader out there that I can. Trading is hard enough for most and believe me, over the years I've learned the hard way, but trade very consistent and successful now.
ReplyDeleteYep, volatile market the last few days but actually perfect for trading. As day-traders, this volatility is what we require and feed off of. Trading a one directional market for an extended period of time sux.
Todays bounce from the lows was nothing more than a technical, oversold push up unless SPX cash can regain and CLOSE above the 1315 area in the next few days. If we do continue down, I don't see SPX going any lower than the 1230-1250 area before we resume the run back up to new highs... Remember, QE2 is still in play which will keep alot of money sloshing around the equities market. The only caveat to further downside would be continued massive geo-political tension that the market just couldn't shake off...
Vis
Yeah Vis, the reversal off the low today showed money moving out of oil, silver/gold and safe haven currencies and into stocks. Definitely a high confidence buy off that level technically as well. Never can be sure how much of a bounce you will get in that situation though and no telling how much the Gaddafi rumor influenced the move. But the shift in asset allocation, definitely coincided with it... I bought off the low for technical reasons, but I may have held longer had I received that news byte a little sooner.
ReplyDeleteI'm with you on the bigger bullish picture regarding QE2, but it seems that there isn't anybody left out there who isn't on board with that talk. Thats why I look at it as a contrarian play in the short term with the market as over-bought as it is/was. Not to mention the rumblings within the Fed about putting an end to the easy money...
Vis, shoot me an email if you get a chance: verde at wethetrader dot com