Lacking Paper Sellers

That was the story today. It was just a slow grind lower on with the occasional scaled down Paper buyer who loaded the locals short. I was expecting a decent rally after finding support from the Value Area High 34.75 which would then continue yesterdays late day reversal. However once we crossed back through the low of 33.00 (within the wiggle room of the VA) there was no looking back, just a continued slow grind trend day. The locals didn’t have to work to push the market lower. This is a clear indication of a trend day, no stand out Paper either way but the market just wants to drift lower.

Trend days can chew up traders who like to pick bottoms (or tops in up trends). Few can do it successfully. Paul Tudor Jones liked to pick tops and bottoms. He was mostly picking bottoms in a bull market and made a fortune. It would take him a few tries before he found the true bottom and being a brilliant trader trained by a brilliant trader also helped. I have watched traders lose fortunes trying to pick tops and bottoms. After witnessing the carnage I learned quickly that I would rather go with the flow and have all the momentum of the markets at my back than try to fight it.

We closed at 1118.25 which is below today’s OR, yesterdays OR and come to think of it….. all the OR’s from last week. That’s not a sign of a healthy market.

My wife is a fan of the television show Greys Anatomy, I’m more the Scrubs type but rarely ever watch it. But on the even rarer occasion that my wife and I are in the same room, the TV is on and she has control of the remote, its Greys that’s on the tube. I never dreamed of being a doctor and after watching Greys it is the furthest thing from my mind.

However, sometimes when I get deep in to the zone, I think of the market as a patient laying on an operating table with all the monitors hooked up. The up ticks and down ticks of the bonds, gold, crude, and index futures are the scales on the instruments. As the market ticks past the OR, then the Value Areas high, then low, then the IB, the patient slowly dies, occasionally coming to life and gasping for air after hitting the support of a Value Area or old OR but then falling back into a comatose state and a slow death. Morbid I know, what’s even more morbid is while the patient is dying I’m short, making money and loving it.

We have Fed meeting minutes tomorrow at 2:00ET and unless they announce that they plan to go “negative” next meeting, I don’t see much happening to the upside. There is a chance that we are putting in a double bottom to yesterdays low of 1112.75. That print sure spoke “leg bottom” at the time, which is another reason that I was looking for more upside today. Taking out that low by more than 3 handles and we can say "good night Gracie".


Tim Mack


"Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense." - Buddha