2013-02-11

$ES_F : 1520-1512 : Market Recap


Shock! Horror! $DJI once again closed below 14,000

1517 new high in overnight. Otherwise a dull day.


During my recent visit to HK, I noted a clear change in our customer sentiments. Considering I travelled a long distance, typical meeting opener is "how are things here". Traditionally the Asian customers are very bullish. They would be boasting their business success. They would talk about their plans for coming days, weeks, years. This time it was bit subtle. All is well but ... In most conversations there was but. Business is good but we are on hiring freeze, or worse cutting down - down sizing as they call it euphemistically. We are doing good but we are not investing - the focus is on bottom line. Need to meet the numbers. Somehow it feels that all is not so well under the surface.

Anyway, I came in the day bullish as per this trade plan. Overnight markets were pointing higher and made new high at 1517. I was expecting the 1520 target to be met today. But markets had a tired note from open and pushed lower from open. Volume was good and VIX got crushed below 13 handle again. After opening close to unchanged, market quickly dropped into the 1512-1508 support area giving entries for long. The subsequent rally was not strong, 24 hour session midpoint 1513.5 provided opportunity to close 50% of positions, the remaining were left with Low of Day stop. However the failure to make any strong move up was warning that rally is fading so I could manage to close positions on mental stops/intra day set-ups. There was another attempt to rally near close but that too appears to be fizzled out.

So today ended up as dull day overall. I managed to add few positions on my stock portfolio. Short NFLX and Long CSCO and FB. YHOO appears to be close to stop out. Looks like it will go tomorrow.

So what do I see now? Well today the market appeared balanced and stuck in range with no clear winner on bull or bear side. A minor short set-up is in play and can take the futures to 1508 or even 1506 but these are still within the support zone for next rally to build up. So far there is no rejection of highs and no aggressive selling. 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 1520-1540 area. I would expect that to be reached via a series of measured moves.

Day session range was mere 5 pt gap and overall range has been 7. A very lazy market.