Wednesday, August 05, 2009

Why I got out

Here is a five minute chart of day session e-mini trading. I was long one unit from 999.50 this morning but I sold this position at 997.75 on the rally from the day's low. The main reason for getting out of the long position was that the market's action today was opposite to that on which my buy this morning was premised. Moreover, the market has spent most of the session trading below yesterday's close (blue dotted line), today's open (purple dotted line) and yesterday's midpoint (red dash line). This is very short run bearish behavior, so when I saw what appeared to be a volume climax bar at the top of a rally (red arrows) I accepted a small loss.

Now I am going to try to establish a long position in the 987-90 zone (green oval). I expect this opportunity to arise late today or early tomorrow.


PM said...

Hi Carl,

I agree with you that the market looks very solid.

On 7/15/2009 09:09:00 AM I posted to you:

"Good Morning Carl,

According to my model, a close today above 909.50 will confirm that the correction is completed and that we should move higher from here. My next absolute maximum high (although no guarantee that we'll ever reach it) is 1069.60, give or take a few ticks."

Well, this market may well go higher, but my model is now warning me of a possible sell signal. They are as follows: a close on Thursday below 996.30 or a close on Friday below 1018.50 will confirm for me that a top of some proportion is in place and that a correction has begun.

Mind you, considering the apparent strength of this market, the correction may be shallow and brief, but provided we have a confirmation on the close, then I would expect to see selling come into the market for more than just a one day pull back.


Kindest regards,


FH said...

Is the short term behavior very bearish or is the bearish behavior very short term?