ES futures continue to grind away ever so slowly upwards. This, perhaps a good indication of restored confidence in the markets. One thing I notice is that the moves up take quite a bit of time to develop and a smackdown occurs only to jump right back up again - kind of like the movie Rocky. Bears stuck shorting at 940 levels haven't felt enough pain given that since Wednesday, the market has only moved up 4% - nothing to rave about. As a swing trader, I just don't see the odds working in my favor if I shorted here and this really isn't something resembling a spike to me - more of a continuation move off a bottom in the works. I continue to maintain a bullish outlook being skeptical and contrarian to the pasts' overall intermediate term sentiment of bearishness. I also am revising support levels to 940 adjusting for recent market action. I would suggest watching GSE related instruments. In Berkely, California Friday, Chairman Ben Bernanke said that continued strong support is needed in issues like Fannie Mae, Freddie Mac, and Ginnie Mae. My assessment says that those instruments could see significant price movement upwards off current levels. Last week I recommended buys on FNM and FRE. Each has climbed over 30% since that call. This is a rainy day kind of investment worthy of IRA funds. Trading for quick profits would be extremely stupid, imho.
VIX stabilization, as mentioned in a previous post towards 50 has all but bored traders to death the past four sessions. Market movement has been choppy leaving daytraders in frustration mode. Since the throwback last Wednesday, the market has been chopping higher. Today was a progression of lower highs and lower lows until the last hour when the market recovered. The bull vs. bear war is on right here at 960-980. To lock in profit and prevent any substantial downside risk, stops at 959.
As I sit here tonight, I have read a lot of stuff about "what will happen if McCain or Obama win the election?" Does it really matter? Big money has already made its bet and if you are living under a rock, the polls are saying that Obama wins. The overall markets will move in the direction of big money. Big money already has its own agenda. You are either with that sentiment or not. If you are that worked up about what will happen, you should be looking at what particular sectors and stocks stand to benefit with that candidate's win. However, I would hesitate to say that jumping in too early may end up as a big mistake. Let me explain. We all had a good feeling that if GW won the elections in 2000 that oil stood to benefit. However, crude oil headed down months later and those who tried to "game" the result ended up destroying their accounts. So word of advice - "be careful out there and use wise money management". The trade setup this week is no different at any point in time the past two weeks. You trade what you see and stick to your plan. Why make it more difficult than it needs to be? If you didnt have a plan two weeks ago, why are you trying to make one now?
ES 960-980 continues to be the zone. A breakout over 980 would look to send this market higher. Also something that came to mind as I wrote this is that we havent seen a good gap and run in a while. Given the bulltrap two weeks ago, the throwback last Wednesday on close, a good gap and run maybe in due order to regain confidence in the global markets before election results come out. More so if all those that missed the bottom are now wanting to get back into the game. I've always been one to believe that those who take risks and can project forward with firm goals in m ind should be the greatest winners in life. The same applies to true in trading. So I am going to make a bold call here for the next 10 days: ES 1120 Review of trading action, I am revising support upward from ES 940 to ES 952. Good night.
Markets gapped up overnight and ran all day today. Midday, futures pulled back. ES hit 1001.25 as its high. Currently trading 991 as I write this. ES needs a strong close to keep the potential of a bull rally intact. A close near 1010 would be best in the final 45 minutes. I am moving all stops tighter and looking for support at 972 ES.
- Ultra Financial Proshares (UYG) long bias. Chart looks like it is improving. - QID trading right at my $60 target and got there faster than I thought - NCC blew over the $2.40 resistance - AIG up over 60% - GOOG +$40 - Goldman Sachs not good long here, probably good in mid $80s - GE bounced nicely off high $17 call trading $21 after hours I am not ruling out that this is a "spike" and would play it safe here with tighter trailing stops than normal ES hovers above 1000. Volume today was light but came off higher on almost non existent volume yesterday. Volume is less than average relative to the last month this likely due to lower volatility. VIX now sits below 50 and looks to stick around here for the next few weeks. Given todays nice 33 point gain, and trading at a key integral number 1000, things could get whippy here. Maybe more upside and then another throwback. Locked at 994s. Points +173.
Buy the presidential rally, sell the news was the theme today as the markets sold off all the upside chop. Stopping out at 994 was a good thing and this looks like a throwback as I suggested in the last post. I didn't put on a short today because I felt that was UNAMERICAN - but I saw this coming and it came as no surprise. Pushing up stops and locking in profit towards integral numbers are a lesson to take and one I've learned over the years. As I write this ES has taken a 6% dump trading at 945.50. I believe this is a short term bottom and see 945.75 as a long. Will build this position in gradually.
Playing long and bad news is good contrarian view. Holding small position of 945 still. Tripled up at 907.
My thoughts for trading in the near future: http://search.playlist.com/tracks/don henley new york minute It happens Harry was a perma bear.