2013-02-14

$ES_F : 1507-1517 : Market Recap


Oh Dear! Will it Ever End

Good attempt by short but no follow through


Whatever happens in the world, this market seems to be discounting it all. This is sign of tremendous strength of the bullish sentiment. Volumes are missing from these markets so a warning sign BUT so far there is no sign of chink in the armour of bulls. Today started with an overload of bad news on GDP front but these all all bad news of economy is good news of stock market because the participants expect more money printing and more bailouts. Here is the 5 min day session chart for E-Mini.


I came in the day cautiously bearish as per this trade plan. Overnight markets were weak and completed a full short set-up (albeit on small time frame). The news from Europe was not great. Coupled with the flirting with resistance levels, it seemed may be just may be bears will have time to show their claws this time. Markets opened gap down and immediately made low of the day at 1510.75 with high volume and lowest tick reading for the day. This is first arrow on the chart. That it self was a sign of "worry" for bears but it is easier to say that in hind sight. May be a a lesson for future.


Once the low was established, markets moved up to fill the gap and did not look back at all until hitting 1518.75 mid day - second arrow on the chart. By this time I was filled on the shorts as per trade plan. Since this was within the expected trading pattern I expected market to drop to lower levels which it did but in a slow grind fashion. If I was acting suspicious by this time I would have taken opportunity to exit at 1516 area on break even or slight profit level at third arrow but I was bit confident of the short set-up which was a mistake. There were signs that bears are losing control - the volume was low on down side, the drop was grinding instead of sharp. These are all lessons for future. Eventually markets kept heading higher and traded all the way to 1420.25 quashing all hopes of bear case. Eventually I mentioned this comment to say that bearish case is over for the time being. At the time of writing, I am looking for another dip to VWAP level to exit my shorts at minor loss if possible.

So what do I see now? The major long trend is not broken and yet another short set-up was defeated. Tomorrow is options expiry so could be a choppy trading. Monday is holiday in US so I would expect trading to be slow and volume less.

There was no major change in my stock portfolio.

Day session range was 10 pt and overall range has been 10. VIX crashed back in 12 handle.