Its hard to be anything but neutral in the immediate term. Volume and volatility have been virtually non-existent. Following the brief move to new highs this morning, we saw the first prominent sign of sellers entering the market in a while. Even though volume remained subdued, I think there is a good chance for lower prices as we head into the end of this week. We'll need to see the 1518-1520 price range hold overnight and into Thursday morning to gain confidence in this idea.
In this low-volume, grind-higher market it is difficult to find quality shorts to hold for sizable gains (well that is because there haven't been any sizable gains to the downside yet this year). In that light, it may be more prudent to wait for the first decent pullback to buy into, rather than try and pick a short-term top to hold a swing trade (when I say swing in this case, I mean three days in duration at the most). That being said, I will continue to look for shorts in the 1519 price area on the ES. No guarantees we will see any significant selling come in, but I like the chances of seeing lower prices into the end of the week. I'll be pretty quick to jump back onto the long side again if we do see a small sell-off here. We'll have to wait and see.
Levels to watch on the ES (H, March 2013 Contract):
Resistance above at 1519-1520, 1522-1523
Support below at: 1510-1511, 1500-1501, 1491-1492
Hi Verde - Its been a while since I posted to you but I just wanted to say hello and that I think we are near a short term top. Some where in this range we should drop to the SPX 1480 area. At that point I see us finally going all the way up to the 2007 highs at SPX 1576.09(cash). We are too close to that area not to touch it and it fits from a long term technical perspective also. We are very over bought here and there are longer term bearish divergences building on all the charts. Bernanke has almost acheived his goal and I think the ultimate top is close. The only caveat is the debt ceiling talks and they could muddy the picture somewhat short term. But, I think from the 2007 top - when we get there, it will be a fun ride back down for awhile. IMO, there is nothing revolutionary or economically standing that will continue to propel us over that top(1576.09) without a very sizeable drop first.
ReplyDeleteIn the mean time with this total lack of volatility in ES, I have been trading Crude(CL). Not sure if you trade it or not, but it really has been the way to go to make money. It moves fast and you have to be careful, but you can apply the same principles and strategies as you do to ES to CL. The exceptions are CL is more of a breakout/fakeout type situation and the vol is much lower which exagerates the moves alot more. Plus CL doesn't try and create the pretty symetrical chart patterns that ES does and does not just sit in one area(after a 5-8 pt move) like ES has been doing for so long now. Maybe you can check it out if you have time.
Anyway, just wanted to say hello and kinda state my roadmap to this craziness that we call "making a living", and I hope that you are doing well...
Take care - Vis
Hey Vis nice to hear from you. I think we are sharing similar thoughts on this market. I don't trade CL, but have considered it and see myself trading it at some point. Speaking of CL, it is also looking like it could correct a bit and perhaps it will lead the S&P lower...
ReplyDeleteI feel you on trading the ES lately, it can be enough to make you bang your head against the wall waiting three hours to make two points... but on the bright side, its a good lesson on patience and discipline.
I'm from New England originally and am a skier. Terrain is far from the best and snow conditions are often icy. We always said, if you learn to ski in New England, you can ski anywhere. Maybe its the same with the ES. If you learn to trade the ES successfully, you can trade anything :)
Best, Verde