Wednesday, June 24, 2009

An Emily Litella moment

Here is a 30 minute bar chart of recent e-mini day session trading. Contrary to my expectation this morning's fast up move out of yesterday's narrow range now looks like a fake out - an Emily Litella, "never mind" moment. The fact that the rally stalled at exactly the spot where it equaled the last rally on the way down was the first warning (purple dotted rectangles). After the Fed news volume expanded dramatically on the down side instead of contracting as it would during a reaction. This was the decisive consideration.

I know think that the reaction from last week's high at 953 is not over and that it will carry the market down to 870.


janet said...

End of month window dressing will no doubt play a major roll over the next 4-5 trading sessions. That will probably be the near term market prop.

Rhett said...

Carl, the lack of follow through is because of the narrow range of the pit pivots. Since yesterday was such a narrow range day, that causes the pit pivots range for today to be exceptionally narrow also. The rally peak today at 11am approached R3 which nerved out the pit traders, because R3 is supposed to be an extremely rare event. So...they sold it. I believe the rally is yet intact and we will likely move higher tommorrow.