Wednesday, March 30, 2011

Markets Continue Their Unabated Rise

Markets gapping up this morning. The rebound since the March 16th bottom has been quite impressive, but it is important to pay attention to the low volume that has characterized it. While the longer-term direction may still be up, it will surprise me if the climb continues without a hick-up.

The ES is hitting its final level of resistance this morning. See chart below:


I expect a reversal off this level (the red dashed up-trend line). We may consolidate first, but markets are due for some selling since the unabated move up off the March 16th lows. If the markets don't pause at this final resistance level, that would be surprisingly bullish.

Levels to watch today on the ES:
Resistance above at 1323-1325, 1329-1330
Support below at: 1316-1317, 1310-1311, 1304-1305
Posted by Verde at 9:23 AM
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7 comments:

  1. VerdeMarch 30, 2011 at 11:39 AM

    By the way, I've been short from 1323 since the early going. It doesn't look great now. Should have already sold off, but like I suggested, we may consolidate below the dashed trend line before seeing a dip down. But I expect at least a move down to 1312-1313.

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  2. VerdeMarch 30, 2011 at 12:19 PM

    No love for the shorts...

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  3. VerdeMarch 30, 2011 at 12:40 PM

    low volume has proven once again to propel markets higher. Doesn't pay to think short when there is no volume in the market...

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  4. AnonymousMarch 30, 2011 at 1:06 PM

    Hello Verde - Quit fighting the long side. Go long 1 con and just add on the dips. The market is too strong. SPX 1332 cash and then 1344 is coming soon... Hope you're doing well otherwise...

    Vis

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  5. VerdeMarch 30, 2011 at 2:03 PM

    I recently read the following quote from Oil Traders blog:

    "Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money."
    - Bruce Kovner, hedge fund manager

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  6. AnonymousMarch 30, 2011 at 3:54 PM

    Yes, I agree with that to a point. But, if you keep getting stopped out on many trades on the way to doubling your money with your "third best judgement", all you're still doing is losing money or maybe just breaking even. And it's much less mentally taxing to be on the right side of the trade which to me allows for better exit stategies.

    All I'm saying is that a broken clock is right twice a day and eventually you will be right in the short position that you have taken. But why fight the trend. It's much easier to be long now(as long as this bull continues) and adjust your position if it goes against you. The time to short will come but it's just not here yet IMHO. We are overbought as I write this and I expect a pull back here, but it won't be much.

    But, I do respect you for posting your trades and being honest about them.

    Vis

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  7. VerdeMarch 30, 2011 at 4:37 PM

    Thanks Vis. I continue to debate whether or not it is useful to post trades here as I don't post all my trades and without posting all trades, perhaps it is a disservice to post any at all.

    That being said, we never confirmed a move above the 1323-1325 resistance trend line. For this reason, I am still bearish short term. I am only confident in a 10 point move down from here to 1312 or so. I'm still neutral in my stance on the market though it seems that many are predicting a march back up to new highs is already under way... I don't think it will be that easy to get back on the long side again. There needs to be some shake-outs first. That is my opinion anyway. We'll see how it goes...

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