Battle of the Machines

Trading action today is phenomenally computer driven. The algorithms are having a fierce battle against one another and are keeping price action confined to a very tight range with incredible precision. If you open a Momentum bar chart set to have a new bar form with each one point move and load up the @ES (S&P 500 Futures), you can see how non-human-like the action is. See video below:

Looking Ahead to June 8th, 2010

Major weakness into the close today in the markets. Potential continued selling in the overnight session with support on the ES between 1036 and 1040.

Looking Ahead to Tuesday's Open

There was some bullish up-trending action in the second half of trading today but the 1140 resistance is close overhead on the ES. We are still in consolidation mode until we confirm a break above the 1140 resistance. Gap Fill at 1107.50 was not officially met, so that leaves a potential move back down to that level a possibility for tomorrow.

Euro at 14 Month Lows, US Market Sells Into the Close

Market Analysis for Wednesday May 12th

Europe Announces $1 Trillion Bailout in Attempt to Stabilize World Markets

Futures are up, Euro is up, dollar is down as the US equities markets look to gap up on Monday Morning.

Key resistance between 1144 and 1145 on the ES. A close above this level will be a bullish sign for the markets.

What to Look for in Thursday's Trading

Key Support between 1142 and 1146. If we trade down to these levels I will be looking for a Long Scalp that could turn into a swing trade preferably around 1144. The way that works is that you take half your position off the table for a quick profit anywhere from 1.5 to 3 points, then you let the other half position go for a runner to the upside. If trading comes back down below your entry, you exit the 2nd half of the position for no loss...

If we trade upwards tomorrow, I will look for short entries at three different target ranges.
1: 1170 to 1173
2: 1175 to 1177
3: 1182 to 1185

I will pick the best reversal scenarios within those ranges based on price action...

Looking Ahead to Wednesday's Open

Looking Ahead to Friday's Open

If you could only go back to March of last year and know that buying every dip in the market would be easy money, well you'd probably have a larger account than you do. My point is that after Tuesday's substantial sell-off on high volume, buyers came back into the market and prices are higher once again. The market will have a way of determining just when enough people feel safe enough to buy the dip so that buying the dip will only be a trick. The bottom will fall out when we least expect it. So my message here is not that you can't continue to buy the dips, but that you must be cautious and know that buying the dips will not work forever.

With an increase in volatility of late and larger daily ranges coming into play, I will be looking to play this market in a range between 1177 and 1216 (on the ES) until we break up or down outside of this range. That doesn't mean we can't break out tomorrow and make new highs, but I'll alter my thinking when that happens, not before.

In the near term on the ES, I am seeing resistance at 1207 and 1216.50 and support at 1198-1199. There is further support below at 1192 and 1177.

For some video analysis, see below:

OK, And Now What?

Biggest Drop Since Feb 4th, Now What?

Part 1:


Part 2: