Wednesday, July 22, 2009
Why I got in (and out)
I just sold my long position at 951.75. (I added the chart about 5 minutes after this post first appeared.) The market had held support at 951.50 (purple dotted line) but I didn't like the fact that it failed to bounce up away from that level as soon as it was hit. Instead the ES hovered there, even edging a bit lower at times. Then we saw a rally to 954, but a rally on relatively low volume. In the last hour of trading the market then put in a wide range, high volume down bar from this lower top (red arrows). This kicked me out.
Why did I buy the apparent breakout earlier? Well, as you know I am bullish on this market. And it wasn't showing any tendency to react. The real danger I saw was that it would run up 10 or 20 points without me, and I was willing to accept a modest loss to guarantee that I wouldn't be left behind in that event