2013-02-22

$ES_F : 1510 - 1490 : Market Recap

In round I bears have been shaken a bit today. Bull-1 Bear-0


Short set-up is not broken but it is not looking great for bears. Caution required on both sides.


Well on the face of it, you will need to give it to bulls. They have defended 1495 clearly and after that, they have broken some intra day short set-ups. The main short set-up for last 2 days drop is still in play but if the performance tomorrow is as good as today, that is not likely to hold for much longer. Volumes were missing today however and only came in the end possibly to squeeze new shorts. Here is 5 minute chart of today's day session.


I came in the day cautiously bearish as per this trade plan. Overnight markets were bullish but were within the main short set-up and I was expecting that once the run up from 1495 is exhausted, we should get new sellers in. Markets opened gap up but was looking vulnerable on highs and I was expecting a gap fill move at least. I went short at first red arrow and there was immediate reaction to down side. However rally started stalling near 1504 making me suspicious. I was trailing mental stops near VWAP and after market broke above it first time, I took exit at second green arrow. From hindsight it looks bit early but I was cautious today. Market proceeded to make a new low at 1503.25 but I was expecting lower level, at least 1501-1500 so I did not go long. In hindsight, it was a mistake as there were signals that market has changed control to bulls.

Eventually market filled my short orders at 1510/11/12 in quick succession and for a while 1512 was the high of the day giving me comfort that sellers were holding it. However since market spent a lot of time near highs, I took one partial exit at 1509 and moved stops to break evens. However mentally I was not looking comfortable with shorts and I exited on moves up when no follow through occurred on the down side. I was expecting at least a move down to VWAP but even that did not materialise. Overall it was a scratch type of day. The main player today were the buyers of dips not sellers of rally. Comments section of the trade plan has details of my discussion/trades.


So what do I see now? As of now the market looks bullish to balanced but there is no specific long set-up in play. If 1518 is held, we can see further down side but so far bears have not been strong. S&P has finally shown a green week but barely. The on going measured move long set-up is broken but short set-up still needs to confirm. Until there is a clear resolution looks like I will be cautious and scratching trades. Next level of support exist in 1488-70 area.

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

Day session range was 12 pt + gap and overall range has been 13 pt.