Nothing new to add

Doing nothing since closing my shorts from ES 927.5 at ES 889.5 I expected a rally, but not such a fierce rally. The A/D and volume on Monday's retrace made me wary about shorting this rally. I tried a few scalps around 894 that did not work and basically got out for break even. Same deal with a short at 914.5 this morning which I exited for break even. I think we see 928 where I may try a scalp, but that again is a low confidence short. Instead I should have done what the the A/D line told me, which was go long. The second sign was the way 25K ES contracts were taken out in under a minute when the 884 line was taken out. The signs were there, but I chose to ignore joining the rally. If this market continues like the way it is going, I wouldn't be surprised to see ES 965 by Jul 23rd, even though that seems a bit early given the time factor.

Market action for Mon 7/13

Beware the 13th. This goes for both bulls and bears. Market tried testing the previous lows on low volume and that set off a spring into the close. Now this shows SPX 870 line is being protected to prevent the H&S effect and make it into a rectangle. 4 weeks of closing red is not too good for the bear case. Ideally we should have closed above SPX 885 for the week, but did not. 3 days of Dojis isn't good for the bulls either. So, rather than make any predictions about Monday, all I'm going to say is break of 870 on volume says SPX target is 840. Eventual target for H&S neckline break is in the low 800s. Instead if we set off a rally into Opex, SPX 890 to 910 should offer an excellent shorting area.

The probability of a gap and crap Monday is still out there. My ST short position initiated at ES927.5 has now become an IT position with a stop at ES893. Just wish I had doubled on my contracts at 927.5. I hate chasing the market and yet feel pissed about running with a 25% position.

Dead Cat Bounce

Market thought for Jul 2nd, 2009

At times I forget I have a blog to post. Posting regularly will take some time getting used to. Anyways, quick note is, I'm short from 927.5 and holding it.

For the bear case to win out tomorrow, SPX 916 and 912 need to be broken. ES under 911 by tomorrow's open can set the ball rolling. UE numbers may get massaged with revisions to meet the -360K expected number (more likely around -500K), but UE rate will very likely come in 0.1% higher. This should put downward pressure on the market during the morning with a reversal in the afternoon. If the USD tanks on this report, then we may see a crazy rally like Wednesday morning with SPX again making it back to 929/930 on the back of commodities.

Market with markup shenanigans - SPX 916 to 930.

Market with no shenanigans - SPX 915 to 908/904 with a reversal around 908/904 to test 912 before the close. If the second case happens, shorting 912 or the close would be ideal for a down monday.

Before you ask why two forecasts, Wednesday's action left me confused. There was no edge to either bear or bull, and the only reason I could come up with is a pump and dump scheme by the MMs before pulling the rug from under the longs. In short this is one f'ed up market with very little structural liquidity and program trading dominating everything else. If you really want to know where the market is going, ask the Goldman boys.