2013-02-21

$ES_F : 1509-1495 : Expected Day Session Range for EMINI


First sign of bear claws. Fed spoils the party.

A clear bearish reversals sets up a short set-up. Now time for follow through.


I was late yesterday so did not have time for a blog post but what a day. Fed came and spoiled the party by "hinting" no more free money and market traded to levels last seen on 7th Feb wiping nearly 2 weeks of gains. Well that, my dear friends, is the power of bears, the ride up is grinding but crash is quick. That is one reason I love to trade bear markets.

The markets were in key overbought territory and this is first sign of a correction. Please do not mistake it for a signal to outright short. I had been cautious on the highs, mainly trading on day trade basis only. I am also equally cautious here and not going short all the way in. Remember, so far only the long set-ups are broken. We need need a short set-up to hold. However tempting it looks, we need a confirmation for big short positions. Key levels for me to watch are 1488-1470 area for support in medium term. So far the feel from yesterday's correction was similar to 4th Feb 2013. Then the markets quickly reversed next day and made new high. We need to be watchful of that pattern repeating. Since 1510-1522 range is broken (first on upside as fake out and then on downside with good volume), that should act as resistance. Today I would expect resistance in 1509-1512 area. I will update the comments section as the day develops.


Today my initial bet would be to find resistance in 1509-1512 area leading to a move down to 1495 region. I would expect the low of the day in 1497-94 area expecting a narrow 15-13 point range. I am looking for confirmation of yesterday's set-up and if it does the bullish case is over for sometime.

In my hypothetical stock portfolio I completed my AAPL position. I am now net short in the portfolio and looking to balance it at key SPY support levels.

If market starts breaching 1518 I would need to reject the bearish case and expect further move up to new highs.