Much to my chagrin, outside obligations prevented me from trading today, pretty ironic given that the markets saw the most action and volatility in some time. The one caveat though, is that my swing short position made up some ground in my absence and is finally looking to be in better shape. Markets will need to see some follow-through to the downside, however, for the short to continue to look good.
I mentioned last week that growing tensions in the Middle-East (including North Africa) would likely provide the catalyst for selling in the US markets, so it is not a big surprise to see weakness at the start of the trading week.
Will the weakness continue? That is the pressing question.
Political tensions and a near civil-war type atmosphere in Libya (the 11th largest oil exporter in the world at 1.7 million barrels a day) caused markets around the globe to sell-off on fears of higher oil prices and renewed concern over inflation. Saudi Arabia has tried to calm global fears by saying they will increase oil production in the short-term to compensate for any lost capacity out of Libya. Perhaps that will be enough to calm fears, we'll see how the situation continues to unfold. I don't think this is the end of it...
ANALYSIS OF TUESDAY'S ACTION ON THE ES:
The gap down was the largest since before the current bull rally began on September 1st of last year. Key support levels were broken as the ES traded through 1327-1328 and then through 1317-1318. To see this downturn continue, the prior 1327-1328 support needs to hold as resistance. The next key support level to test will be 1302-1303 ES. I expect to see a test of that level this week and consider the low 1300s to be a potential buying opportunity (I will consider taking half off my swing short position there).
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment