????

Paper buyers came in strong off the bell. The locals were short and got run over. They reversed and got long adding to the straight up 10 handle rally. We hit 1122 and I think the whole world got short. I was expecting the OR to hold due to the aggressive Paper buyers off the open but we plowed right through after a test.

When we rally 10-12 straight handles such a move will exhaust the buyers. Nobody wants to buy the high after 10 handles. The bulls will wait for a pull back if they want to get long or add to a position. The problem with that is that the locals are short in a breaking market so they will scoop up any buyer who comes in above the OR. They will be more cautious around the OR but if they can muscle it through they will continue selling to any Paper buyer. And why not, they are short, green and the market is going their way. In my opinion it’s the way to make the big money. Some traders will put on their full position and scale out taking profits along the way. I prefer to add on to winning trades and quickly scratch or cover a loser. Both ways can work, its just your style and goals that drive how you manage a position.


Its noteworthy that the market rallied 9 handles above the OR high and found a top then sold off to 9 handles below the OR low. This symmetry occurs often. Its always a place to look for support or resistance when we cross through the OR. After rallying to the OR we sold off and made a solid low 1099. Then back to the OR to chop around. It’s a bit puzzling because we sold off pretty well, really chopped around this OR all afternoon, was down all day from yesterday’s settle but the Arms was rather bullish settling at .52. Options expire Friday so maybe their will be some games played. We have been down most Fridays since the first of the year and May 20th (Thursday) should be an important pivot date so I have a lot of mixed signals right now.

Nevertheless because of how we rotated around the OR 13.75-12.50 I believe how we open against this range will set the mornings activity after that and beyond the first hour trade (Initial Balance period) its anybody’s call. Still feeling bearish as long as we are under the 8 MA VA at 43.25



Tim Mack


“Play the game for more than you can afford to lose... only then will you learn the game.” - Winston Churchill