Tuesday, June 09, 2009

Near support

Here is a five minute bar chart of e-mini day session trading. As you know I think the market's rally yesterday represented a clear rejection of prices below the 930 level. I believe that it is important to trade only in the direction indicated by the last rejection the market makes of some support or resistance level. In this case the support level was the low of June 3 which was at 922.50.

If the market is indeed headed upward from here I think it will not trade below the midpoint of yesterday's day session at 936 (red dashed line). This is also the low of a trading range which has been established since yesterday's high (green rectangle). I am sticking with my range estimate for today of 935-950 (blue rectangle).

5 comments:

Ron said...

Looking good so far Carl. Tuesday's (statistically) are weak in the morning and then get strongly bullish in the afternoon.

kcounty said...

great update! suprised you havnt longed a third at 936!

John M said...

Sharp moves that commence at the stroke of lunchtime are always suspect to me. I don't have access to intraday volume, but I suspect they're usually someone taking advantage of the lowered midday volume to trigger a stop or two.

Likewise, I think relatively isolated volume/price spikes at the end of the day are more indicative of a single large trader (perhaps with a few 'me-too' types look to climb aboard a move) than of any shift in sentiment. The lack of follow-through on the heels of such a spike and into the next morning make me especially skeptical.

I'm suspicious by nature, I suppose. That said, my guess is that we've seen the high for today and that the 922 support is vulnerable. The next three hours will tell the tale. I've been wrong before!

John said...

I was surprised you entered the trade so early. Most of the "urgent" buying has happened toward the close.

Obviously, the instincts were on target.

Kishore said...

After reading up a bit on "Dark Pools", I have started wondering whether the Price-Volume action that we see means much anymore.

There seems to be a lot more trading happening on private networks that we don't even see.