2013-04-18

$ES_F : 1555 - 1540 : (Early) Market Recap

Bears are getting strong.


Trend change confirmed. Trading from bearish bias.


Today is an early market recap for me as I have to go out for a lovely dinner but it seems my day trading is already done.

Markets are progressively confirming that the control has been shifted to bears and therefore trading from short side is making sense. I am getting comfortable holding short positions. The volumes are increasing on the selling legs indicating longer term players are taking profit or establishing short positions. New short sellers are also appearing to hold the shake-out attempts well and defending key levels showing the confidence of the markets to go short. I am looking for a move to 1530-1500 initially going all the way to 1450-1400 area. 1593 is marked as important top on my charts and key pivot point to trade from. Here is a 5 minute chart of today's day session.




I came in the day cautiously bearish as per this trade plan. The markets were showing a 4-5 point gap up which was expected to be filled early on in the session so my initial bias was to trade from short side. Market at open had bearish bias and I took the opening high 1549.5 as my anchor and went short at 1545.25 (first red arrow). I adjusted my 15 point expected range and projected new day session low at 1534.5. The trade worked pretty much from the start and selling developed after failed VWAP test. I exited my position at 1536 second green arrow expecting that we are close to low of the day. It certainly proved correct and after putting day session low at 1535.5 markets rallied up strongly. I made the mistake of going short again 1541.25 at VWAP without a confirmed sell signal - third red arrow and I did pay for that since market went straight up and I had to cover at 1545.25  forth green arrow giving up some profits. The trades are mentioned in comments here. My futures trading page based upon home work trade plan is here. The straight up reaction from the low of day was looking like a rejection of the lows but it ended up as bull trap. Market ground lower from this point at the time of writing this post, chopping near the lows.

It appears that markets are spending more time in the lower halves and under pressure. This is a confirmation signal for bears and hint that rallies need to be sold. If markets remain below 1550-1555 zone until week end and close below 1543 this can be a confirmed signal for trend change.

My stock portfolio is on short side with some minor long added on defensive stocks.