End of day recap

Today was a fun day, if this keeps up its going to cut into my afternoon naps- not really. We need to see the Vix close and stay above 17.00 for a sign of returned volatility

Paper came in a big buyer off the opening bell and locals got short. They had a tough time offering the price lower to get it to break. The market rallied against them and came back through the opening range. Unfortunately for the locals they thought after their failed attempt that the market would auction higher and started to reverse their position. Most of them lost every cent they made over the last month. Ahh trading is grand even if you have 20 years experience of being the best day traders in the world.

Funny thing that Goldman Sachs came in at 1206.00 offer 100 cars which kept the lid on the move higher…..then the news came out….. the next thing we knew is the market was trading 10 handles lower. I need to see a higher high above the opening range before getting long which kept me off a long but I was a few ticks from doing so.

The market traded down nicely pausing at old OR’s along the way until we came close to my intra day target of 1182.0 where we bounced to a 50% retracement of 1193.50 . Locals watch this area closely and once the market shows weakness at this level they just jump on board short and try to push the market lower. This is a great test to the strength or weakness of the market. If they get their way we have a weak market and a sell off to the close. If they end up fighting the market then the market shows strength and we will likely see a full retracement of the move lower back to the 1204-1206 area.

That doesn’t mean we are done to the down side although we had some very high Arms reading intra day which is a good sign to hunt for buying opportunities in a up trending market if you are a position trader, but hey that a story for another day.

Also noteworthy is that there was usually large buying of S&P 1000 June puts which traded over 20,000 times. Humm. Someone who can swing a pretty big line is making a big bet to the down side. Options are the instrument of choice for large traders. They hedge them with futures or outrights but when they take a position (a guess) to the market trading to one side or the other with options, often selling them but occasionally buying them.

Also noteworthy is that Goldman has been a quiet seller over the last few days selling 100 cars at time in 20 lots. They also sold 300 cars at 1200.00 (a car or “Big” is 5 times a e mini contract). I think they made enough to cover the SEC fines, funny how that works……

The market was due to break from it way way wayyyyyy over bought condition. Is this the start of a pull back or is it a change in the Continuity of Thought? If it was the Goldman story alone I would say just a pullback to the 1162.00 area before we finish this bull market in June or August. But the disruption of air traffic and commerce that this volcano is causing and the Greek crisis (that doesn’t seem like its being resolved as quickly as we bailed out AIG) makes me very attentive that this could turn into a reversal of trend.

Only time will tell………..

Tim Mack