2013-01-28

$ES_F : 1494-1504 : Market Recap


Another new high, 9th in a row.

Short set-up still not visible.


I came in the day bullish as per this trade plan. Even after 8 consecutive green days, there does not appear to be any pause in the bullish momentum. Markets established and new high at 1500 in overnight session and shortly after open traded close to it at 1499.50. Target 1 of 1500-1520 target area has been met and second target does not look too far which will complete the rally target from 1263 area. Volume was once again very low showing a fatigue. There was a not a single 40,000 contract volume bar in 5 min bar chart so far. VIX spot rose again slightly and is knocking on 14 handle. 3m spread flattened sharply to 2.28. These contradictory signals show that markets are on a cross road and even if the undercurrent is bullish, a minor correction is nearby. Market had a slight bearish bias right from open and it traded comfortably in 1494-92 support zone and eventually trading at low of the day 1491.25. Subsequent rally confirmed the long set-up allowing stops to be moved to break even quickly which I mentioned in this comment.


Eventually after trading back to near day session high at 1498.25 market appeared to be stalling again and I expected a minor short set-up to play with potential target of 1490. I covered my remaining positions at this time instead of letting them run on trailing stops. With about 1 hr to close, market is still trading in the 93-98 zone and if the last minute rally is missing, I would expect a close around 95 area.

Day session range was 8 pt and overall range has been 9 which is bit out of line with rising VIX. I would have expected a 10 point range so may be some move can come towards close to increase the day range.

Beside the minor short set-up I mentioned above from 98 area, which is mainly for watching instead of trading, there is once again no short-set up in play or in sight. But the fatigue is palpable in the market and therefore size of futures rallies are limited unless a consolidation occurs. The earning season is going well so it appears grind high mode would continue for some sessions.

Please have a look at this post and comment what are you planning to do with your AAPL holdings. It is just a small social survey. Thank you.