2013-02-01

$ES_F : 1496-1506 : Market Recap

Longs still in charge. DOW 14000 headline coming in print tomorrow every where.


1510.5 new high. No end in sight for the rally. Expect 1520-1528.


I came in the day undecided as per this trade plan. Yesterday markets failed to close lower enough indicating the underlying strength of the long side and today morning the only prevailing short set-up was under attack again and was decidedly broken in pre-market after NPF numbers which came a little below expectation but markets ignored the news. It would seem any bad news for the economy is good news for markets because they would expect fed to continue pouring money. Volume also improve a bit and VIX got crushed again after reclaiming 14 handle it is now back showing 12 handle and hovering just above new lows. Market opened bullish and the with a wide gap which was not expected to be filled. They traded no where near my expected 1496-94 area, not even 1498 where I would have taken a small probe long. After trading at 1500 markets headed higher without looking back after ISM news put the rocket under the market. I was expecting high of day at 1507.50 via this comment but eventually that too was overtaken.


So today ended up being a no trade day at all. This is usually the case when market opens gap up. I hesitate or expect a bit lower level and market runs away without me but these are my risk management rules and usually markets does not leave open gaps and therefore it is always better to wait for entry near the gap fill level. I did not find any set-up or reason to short the market as it was going up. May be we can test the VWAP at 1506 area today.

So what do I see now? Well tomorrow every news paper and on-line media will be proclaiming DOW 14000 headline. This might tempt some last minute riders to jump on the train and may push the market a bit higher. My twitter stream is already full of it. By trading 1510.5, market has completed another measured move long from 1496-94 area. Markets are showing determined strength. Russell 2000 is already on all time high. Dow is just 200 points behind and likely to reach there next week. SPX is also likely to make an attempt there. Short set-up are not holding and it is futile to short this market as of now. Breadth has been healthy and positive. A lot of people are calling top. No doubt these are time for caution, no time to buy the market with both hands. Technically the market is overbought already. But before trading aggressively on short side one needs a confirmed short set-up. The trend is still long. My projection of current move given a target of 1520-1530 area. I would expect that to be reached via a series of measured moves.

Day session range was 11 pt + gap and overall range has been 15 even though VIX collapsed. CRAZY you bet.