Monday, August 23, 2010
Here is a 30 minute bar chart showing day session e-mini trading. Early this morning I thought that Friday's action meant that Friday's low would hold. But the market took a peek above Thursday's high at 1078 and there sellers took over. At today's low thus far (1067.25) I thought the prospects for a drop to 1055 later today and early tomorrow were good. So I sold a 4 point rally on the hypothesis that the market would soon continue its morning break.
Instead the ES rallied for a greater period of time that it took on the way down from this morning's high. Friday's midpoint at 1067 (dash green line) had held in the meantime. And the market over the past three days had built a trading range (lower purple oval) that is bigger than the 1085-1098 range (upper purple oval) from which it dropped about 37 points.
These observations warn of building bullish potential and I didn't want to stick around to find out if this was the case so I covered. Right now I don't see any convincing opportunities, but if the market closes above today's midpoint at 1073.75 I will conclude that the bulls are back in control and that tomorrow will be a bullish day. Failing that kind of close I will retain a mildly bearish (down to 1055) stance.