2013-02-21

$ES_F : 1495 - 1509 : Market Recap


Bears have confirmed the trend change.

2 Days have erased 2.5 weeks of gains. These were the reasons to be cautious on bullish side.


Finally and after a long wait, bears have managed to control the market for two full sessions in a row and in the process erased all gains from 4th Feb 2013 in just 2 days. The markets were vulnerable to this correction for a long time and even for a longer term bullish case, such a correction was needed to shake out weak hands. Now the question which every one must be asking - is this the end of the bull market since 2003 or is this just a correction. And the the answer my friend is blowing in the winds. Just like bull markets require confirmations and consolidation, bear markets require periods of confirmation and congestions. The markets are a constant battle between bulls and bears and only pigs get slaughtered. Here is 5 minute chart of today's day session.


I came in the day cautiously bullish as per this trade plan. Overnight markets were bearish and still digesting the fed news driven drop. Market was susceptible to shaking out recent buyers. Markets opened gap down and weak and continued to drop but without clear energy on down side. Mainly it was dancing around the VWAP indicating a tug of war. Eventually markets traded to the expected low of the day 1495 to the tick and immediately started going up, providing some short term intra day long opportunity to take profits at VWAP (Green and Red arrow). Since this was counter trend trade, quick profit were warranted though market continued to move higher after that. Market still failed to touch day session high and eventually rolled to end near VWAP - indicating people are still selling rallies.
Volume was reasonable but energy on either side was lacking.

So what do I see now? The on going measured move long set-up is broken. Market is now in sell the rallies mode. Next level of support exist in 1488-70 area and it would seem the market is headed there in coming session.

There were no changes in my stock portfolio which is net short.

Day session range was 9 pt + gap and overall range has been 13 pt.