Exited Long Position Though Market Remains Bullish

Exited my long position (ES U-13 at 1689.75) just before the close of Futures trading this afternoon. I'm not bearish here, its just the odds of holding for more gains do not necessarily out-weigh the odds of a pullback. The ES has moved up 30+ points with hardly any selling since the highs last Friday (9/6/13). The 6th was a shakeout day and the fact that the bulls won suggests that even higher highs are likely in store. While we may get those new highs, the ES is hitting some good resistance and could sell down a bit from here. I may choose to re-enter my long position in the coming days depending on price action.

I am watching the 1657-1667 range (price refers to the ES Z-December contract currently trading 6 points lower than the ES U-September contract) now and will likely buy any pullbacks to that price area.

A close below 1657 (ES Z 13 contract) would turn me bearish and suggest a move back down to 1600 would come next. I don't expect that to happen in the near term, so I favor buying the dips at present.

I will be looking for short entries if the ES (Z December contract) trades up to 1730 in the coming week(s).

This is my speculative view looking forward, we'll see how the price action plays out...

Price Action Shows More Signs to Support the Bearish View

The major indexes, the Dow, S&P 500, Nasdaq and Russell 2000, have experienced two failed rallies in the last five trading days. While the market is still technically bullish, I don't know when I have seen price action that produced topping tails as attractive as these.

I added to my short position this morning and I remain confident in the bearish view looking forward.

To maintain the bearish view:
1) Today's high on the ES (M June 2013 contract) of 1672.75 needs to hold.
2)  The ES (M June 2013) should not see a daily close above 1660-1661.

While I am bearish in the immediate-term, I am not expecting a huge correction.
Support levels I am watching on the ES (M June 2013 Contract) are:
1625-1626, 1607-1608.
If sellers push price further down from there, for example through 1605, the ES could sell down into the 1580s pretty quick. Furthest downside target I can anticipate is in the 1555-1565 price range. Too early to talk about that though. I'll wait for sellers to support my bearish view this week.

Target Resistance Hit Today, Though Market Remains Bullish

Buying dips continues to be profitable. At the same time, I do like the fact that the ES hit my target upside level and found resistance. I entered a (1/2) short position at 1645 (ES M June Contract) in the late afternoon session. I can add one contract to make it a full position. It depends on price action from here as to if/when I will add a contract.

As I said in my last post, I prefer buying dips but I also like short entries at key resistance and/or at new highs. Selling pressure has yet to confirm, but I like the risk/reward ratio at this price level. We'll have to see how the market trades into tomorrow before we know more.

I'll post any updates to the status of this position

Additional Note:
Bonds have broken down below the support I mentioned in my last post, so this is something to monitor. Watch for the TLT to rebound off the current 116.50 level. If bonds continue to weaken and my current short position is not joined by other sellers, it will be a sign to exit.

What to Expect Following the Election

We got the move up to 1430 ES that I talked about in my last post and sellers came in and sold those gains as I expected. Key resistance remains at 1430.  I will be looking for a move up to test last week's high of 1431.50 and possibly break it. That should create another good shorting opportunity. Assuming resistance does hold in the lower 1430s, I will be looking for a  move lower regardless of who wins the election. Initial target to the downside is the mid 1380s. From there I will be looking for the market to find support and eventually form a pivot low that can be bought and held into the end of this year. We'll have to wait and see how price action behaves over time following the election before I get into any more detail there.

The markets should sell off regardless of who wins the election. Markets are already at four year highs and are showing signs of weakness following the announcement of QE3. In the case of a Romney win, assumptions of a change in Federal Reserve monetary policy will cause the markets to sell. In the case of an Obama victory, fear of tax hikes will cause the markets to sell. There is also a high possibility that the election will be close. Any contention or litigation questioning the legitimacy of the winner will cause more uncertainty in the markets and again will influence selling. But in both cases I believe that selling will likely be short lived. We remain in a loose monetary policy environment that favors low interest rates, inflation and devaluation of the US dollar. This is not going to change regardless of a Democrat or Republican victory. The Fiscal Cliff will be less of an event than many expect and markets should  resume their risk on mentality.

For today, look for a range bound market with potential to fade moves in either direction. I am biased to the upside as the election results come in, but like I said, resistance is strong at 1430 ES. A move up to or slightly above this level should provide a great shorting opportunity. I will be looking for the market to sell off below 1400 from there or following the election. First target to the downside is 1385-1388. Good luck and get out there and vote if you are eligible... 

Weakness To Begin The Day Presents Another Buying Opportunity

We begin today's trading with weakness again as the ES has sold down 10 points overnight following losses in Europe and Asia. Weakness may be in response to BHP Billiton suggesting iron ore demand in China is slowing.

We are seeing solid support hold up so far just above the highs from 3/14 and 3/15. Most of this year my bias has been bullish and this means I have favored buying the dips (as I frequently say). This morning is one of those opportunities. If you were, or are able to get a buy entry in the 1395-1395.50 range, it allows you a low risk opportunity to the long side. There is a decent reversal pattern off the low of 1394.25 which allows you to use a small stop at or just below the low making your risk to reward very favorable. If you get stopped out, you can always get long again if support holds and another reversal pattern emerges.

I'm Long ES at 1395.50. First target 1402. Will consider exit if ES trades below 1395, can always get back in long when support confirms.

Levels to watch today on the ES:
Resistance above at: 1401-1402, 1408-1409
Support below at 1393-1394, 1387-1388, 1384-1385

Better Than Expected Employment Numbers Pop the Market Higher

I have not been posting much of late because the market has been dull. The release of the employment numbers this morning changed that, at least for the moment. The ES jumped 14 points higher as non-farm payrolls increased by 243,000 versus an expected 155,000, private payrolls totaled 257,000 versus an expected 168,000 and the unemployment rate fell to 8.3% from 8.5%. This was enough to put a bid under the market.

There is plenty of resistance here in the mid 1330s on the ES and I'll be expecting a little bit of selling to come in. I'll look to take profits on any shorts around 1330-1331 and will consider longs again from there. In fact, 1331-1336 may prove to be a nice trading range to buy the lows and sell the highs. We'll have to wait and see the price action conform this once the ES does trade down to 1330-1331. I'll post in the comments if my thoughts change on this idea.

1290s Resistance Continues to Hold Up

1290s resistance continues to provide profit opportunities. First test of the 1290s happened on Tuesday seeing a 10+ point move off the 1290 level. Next test came yesterday as the ES pushed into the mid 1290s in the early morning reversing downward to provide potential gains of 15+ points. Again last night the ES managed to move back up to 1295 and has now traded 15+ points lower.

As I stated previously, I didn't expect a straight move down off this key resistance, but that moves to the downside would be followed by reversals to the upside. So far this has been the case as the markets continue to consolidate. I expect the larger move down to begin next week and the highs may already be in. That being said, we should see a bounce again here (at 1280-1281 ES) following the selling of the news that the Federal Deficit has widened. JPM earnings fell in at .90c/share versus estimates of .92c/share. We'll see if the JPM conference call (in progress) has an impact. If we do not get a bounce here off the 1280 level, expect a move down to 1274-1275 next.

Short ES at 1245.25

We are now up almost 100 points off the low from last Friday. Happened a lot quicker than I thought it could or would. Regardless of the bullish price action, I have to step in here and put a short on the table.

We have hit the prior support of the triangle pattern that broke down on 11/17. Not a bad play in terms of risk here. I expect a move back below 1230 ES. This is an aggressive trade because there is no confirming signal yet of a reversal... To enter this trade you have to be willing to take heat. I am willing.

We may consolidate up here for a bit before turning back down, but I do expect some profits to be taken off the table sooner rather than later...

Italian Bond Yields Continue to Soar. Markets Sell-Off

10 year Italian bonds now trading at 7.34%. The 3-10 year yield curve on Italian bonds is now inverted. Inverted yield curves almost always precede recessions. Contagion now has Spanish yields trading almost as high as 6%. Money has moved into the US dollar and US treasuries as their safe-haven status continues to be applied. Futures are gapping down significantly this morning.

Amidst this negativity though, it looks like a nice buying opportunity is presenting itself. I like long entries in the 1238-1240 price area on the ES. Be careful defending any longs if price goes below 1236 ES.

Market Consolidating After Decline

Unless you are trading the precious metals that is. I have to say I am shocked to see Silver down 15%!!! In any case, Silver just hit some very key support. This is a buying opportunity. I am long Silver via the SLV at $29.55

Note: See comments below to follow this trade.

Long ES at 1115

Will not defend below 1100, Looking for a surge upward following the initial sell reaction against the FOMC announcement...

Long ES at 1152

Taking a stab at a trade here. I will stop out if ES moves below 1140...

EDIT:
See comments for additional thoughts and trading action

Rough Seas Ahead

The choppy price action that I am expecting for the month of July has begun. This morning the S&P 500 Futures are already trading down 30 points from the Friday morning highs. I exited my swing long position at the close of trading on Friday as I will be expecting opportunities to be both long and short in the coming weeks.

Following the disappointing Employment Report Friday morning, the ES dropped more than 20 points within 5 minutes. That was a pretty extreme move and showed that the market was vulnerable following such a swift run-up. Traders were far too ready to take profits.

I have entered a cautious stance looking forward through the remainder of July. I will be expecting choppy markets as I watch for signs on how the market will trade heading into the fall.

There are several themes that could play out in the coming months. I have some concerns that the market could actually head down to lower lows this year before reversing back upwards. I will describe some of the reasons for this in my next post... For now though, I will be looking to buy dips and sell rallies as the market will likely see a choppy July

Levels to Watch Today on the ES

Levels to watch today on the ES:
Resistance above at: 1373-1374, 1376-1377
Support below at: 1363-1364, 1361

I will consider long entries in the lower 1360s

US Markets Gapping Up This Morning

A gap up this morning puts the ES close to the upper regions of the current consolidation channel. Despite rising input costs, unrest in the MENA region, a slowdown in China, Europe's sovereign debt crisis and the earthquake in Northern Japan, the market remains close to its highest levels since 2008.

The previous Gaps Up from April 1st, 4th and 6th each filled their respective gaps before climbing back up within the consolidation range. Until the market proves otherwise, I will short into resistance at the upper part of the range and and buy the support at the lower part of the range. I will not defend these positions as a move outside of the consolidation will likely be followed by a continuation in the direction of the break-out. If it happens to the downside, it should be on heavier volume than we have seen of late, if it happens to the up-side, it will likely be on low volume.

Levels to watch today on the ES:

Resistance above at: 1336-1337, 1339-1340
Support below at: 1331-1332, 1326-1327, 1323-1324

Markets Seeing a Bid Overnight

On the heels of strong markets overseas, the S&P 500 is threatening to gap up above the prior consolidation highs of the past 2 days.

Economic Data:
PPI Data this morning came in as expected (rising 0.8%) with with the energy sector contributing to the bulk of the rise in producer prices. January Housing Starts beat expectations with 596,000 versus 540,000 consensus. January building permits were slightly lower than expectations coming in at 562,000 versus 575,000

Economic data has had little effect on the market so far. Industrial production numbers to be released at 9:15 EST

FOMC minutes due out at 2:00pm EST.

I maintain a slight bias to the up-side this morning, but we'll have to wait and see if buying can continue after the first hour of trading. May continue to be dull action today ahead of the FOMC minutes this afternoon...

Levels to watch on the ES:
Resistance above at: 1334-1335, 1338-1339
Support below at: 1327-1328, 1321-1323, 1315-1316

Market Showing Weakness After Weak Data

Asian and European markets mixed as China reports lower than expected CPI number. US Markets seeing a little selling following weaker than expected retail sales data.

Little has changed overall since yesterday, in terms of expectations, as we must wait to see if the 1330-1331 level can be broken on the ES. It is possible we see continued indecisive consolidation type trading similar to yesterday, though I expect we should see a larger range today than we did yesterday. Watch for the ES to continue down and test the lower 1320 support. Continued direction will be determined by whether or not the 1320 support breaks down or the 1330 resistance breaks up

Levels to watch on the ES:
Resistance above at: 1330-1331, 1333-1334, 1336-1337
Support below at: 1320-1322, 1315-1316, 1308-1310

Market Showing Weakness

Markets down in Europe and Asia this morning and U.S. market gapping down almost 10 points.

Jobless claims came in better than expected, but market failed to see much of a bid after the news. Will be important to see if buying can come back into the market today. I like selling the up-ticks today in anticipation of trading down to at least 1305-1306. I will be looking to buy the market in the lower 1300s and expect the 1299-1301 support to hold if the ES trades down there. Remember, be careful when buying a market that is selling off. Wait for support to confirm before trying to guess a bottom.

Levels to watch today on the ES:

Resistance above at: 1313-1314, 1320-1322
Support below at: 1310, 1305-1306, 1299-1301, 1295-1296

Levels to Watch this Morning

Futures showing some weakness this morning following modest declines in Asia and European markets. Asian markets were open for first time since China announced a rate hike of another 1/4 percent. In reaction, the Heng Seng is down the most at over 1.3%. Its noteworthy to mention more political unrest between North and South Korea as military talks have apparently broken down between the two sides. No major economic news until Jobless claims tomorrow at 8:30am EST, though Ben Bernanke speaks at 10:00am EST this morning.

I'm more or less neutral this morning. I wouldn't be surprised to see some continued selling come in, though ES should find support above 1313.

Levels to watch today on the ES:

Resistance above at: 1320-1322, 1324-1325, 1328
Support below at: 1313-1314, 1305-1306, 1299-1301

Levels to Watch this Morning

Levels to watch today on the ES:

Resistance above at: 1317, 1320, 1325
Support below at: 1312-1313, 1305-1306, 1300-1301