2013-01-30

$ES_F : 1495-1505 : Market Recap

Another new high 1506


No significant reaction to FOMC


I came in the day bearish as per this trade plan. In the overnight sessions markets made a new high at 1506 and the set-up before open was looking bearish. Volume was on low side again with only a few bars trading more than 40,000 contracts. This exaggerated the choppiness. VIX rose and claimed 14 handle (without much reaction to the market). However after a long time the markets are likely to close near the low of the day (there is still 1 hr to close so things can change). If this remains the case, it can produce another bearish day tomorrow. Market opened and headed to gap fill which gave short entry in the anticipated resistance area of 1493-95 eventually making a high of 1495.50. Subsequent break confirmed that the short set-up is holding allowing 50% profit to be taken and stops moved to then high of day 1495.50 as mentioned in this comment. Since short side is still counter trend, taking early profits on 50% of position makes sense.


I also covered the remaining position sometime before FOMC on a metal stop. Market chopped as expected before FOMC around the VWAP and mid point of the day. FOMC did not provide any new news and the reaction was bearish which allowed me to re-enter 1503, 1505 was not filled this time. Since short is still counter trend I covered this near day session low 1498.25. Markets have subsequently dropped below that as I write this post.

So what do I see now? Markets are establishing bearish bias but once again the Short set-up is not confirmed and minor long set-ups are still in play. I would expect markets to trade towards 1496 and close in the lower half of day session range. If shorts can maintain their fire, I would expect tomorrow to give a confirmed short set-up and breaking some prevailing longs. How this develops after that would be anyone's guess but I will take one day at a time.

Day session range was 9 pt and overall range has been 9 which is out of line with VIX.