2013-01-24

$ES_F : 1480-1490 : Market Recap


Bullish theme continues. However a possible sign of rejection of highs.

Markets established a new high on good volume.


I came in the day bullish as per this trade plan, but given AAPL's disastrous earnings overnight with stock printing 10% down in pre market, I was expecting a deeper pull back before the next move up. Volume was better today and AAPL was very active. The good news is that even with AAPL down so much the markets managed to retain the bullish tone which is very significant for long side. The bad news is that two minor long set-ups are broken on the way down from 1497.75 high which could mean shorts have a chance to prove their strength tomorrow.  VIX spot shot up today by 1 full point before collapsing back again - in fact they halted VIX trading (something I need to check up in news) - this move added to the weakness. 3 m spread is flattening slightly to 2.95. Market had a bullish bias right from open and without any significant dip, and certainly far away from the support area I was expecting, they shot up and went far beyond the expected high of the day stopping only at 1497.75. This made clear that my analysis was out of line and I decided to make it a "no trade" day via this comment.



There was a clear rejection of the high by a nearly 10 pt drop and eventually market found support at the 1484-86 area I mentioned in my plan earlier. The way I see it the short set-up which started from the highs is still in play. However as we have seen most short set-ups have not held for more than a day, it will be only tomorrow if we know if the turnaround from high marks start of a short side trend. Markets eventually made one more attempt at VWAP and close below it.

Day session range was good 12 pt and overall range has been 15. VIX made an attempt at 13 handle and looks like volatility is increasing from the multi year low.

For today we have a short set-up in play in overnight session. If that builds up we can have some much needed move to down side for a small 15-20 pt correction.