1. a high or inordinate opinion of one's own dignity, importance, merit, or superiority, whether as cherished in the mind or as displayed in bearing, conduct, etc.
2. the state or feeling of being proud.
3. a becoming or dignified sense of what is due to oneself or one's position or character; self-respect; self-esteem.
4. pleasure or satisfaction taken in something done by or belonging to oneself or believed to reflect credit upon oneself: civic pride.
This is the detriment of many traders. Fortunately my wife stripped me of every bit of it which allows me to trade carefree. I don’t care if I guess wrong and the market trades against me. I get out, I try to figure out if the market has changed its “flow” and if it has, then get on board. If I cant tell, I sit on my hands until the market tells me which way it wants to go (one of the reasons I started this blog is to have something constructive to do during this time) Usually it will hit a S/R point and I will see Paper or locals entering or puking positions and the market will tell me what to do.
Many traders, once they make a decision, they will stick with that decision regardless if all the signs tell them they are wrong. This is a fault of pride. Many decisions are made during the trading day by many traders. I like to visualize it as Giant Stadium filled with traders everyday, all these different “characters” acting independently in a self-serving manner but as a natural social element, working somewhat together as a crowd (or herd).
Many of these decisions are made at specific times during the day. You can set your watch by some of them. As 1 example there is a program trader who has his clock set at 9:45 ET exactly. If the market is under certain conditions at that time he comes in as a buyer or a seller. There is a buzzer that goes off every 15 minutes on the floor. This is set to tell the traders that they must have their trading cards submitted by this time. I would hear the buzzer and see the system traders program hit the markets. You can see it pretty well on a tick chart but you have to watch closely.
Other than the open and cash close, important times are the first 30 minute and 60 minute time frames. Outside traders sitting in Geneva, Greenwich CT or Giant Stadium make decisions in this time frame.
There is a book that was written by a slime ball, you know the kind who makes your hand greasy when you shake his and you find yourself keeping one hand on your wallet when you are around him. He has a method of opening range trades using a 20 minute period for the S&P. It doesn’t work (so he opened a clearing firm to steal from other traders- now that’s a slime ball!). But even when something doesn’t work in your opinion it can lead you to developing a method of your own that does work. Those methods will always work better because YOU developed them and the work you put into them creates confidence.
For me, I found the 1 minute opening range works well because traders are making a lot of decisions at this time. They are using this point in time and market to measure their pride. Either it’s the locals who took the other side of the opening bell trades or the paper that made those trades. It may be that this works because I am looking at 1 minute charts, there could be another period that works better but that’s up to you to explore. I can easily draw lines on my charts on all the other index futures markets (not cash, thats a different method for another day) marking their OR. I can easily gauge if the markets are working together or not. You can see it using moving averages too but they are taking data from premarket and are lagging indicators.
Nevertheless, the 1 minute open seems to be a line in the sand for the markets. Traders who made a decision there will defend this area in order to maintain their pride. Different products trade differently around the Opening Range. The ES (S&P mini) is a bit sloppy. Too many traders and too much volume in this instrument can push it back and forth over the OR so you need to allow some “wiggle” room. Other thinner markets often respect it to the tick. Using the OR in context with what is occurring in the pit along with what the market is doing auctioning between Value can give you a higher probability that your trade will work.
This game is all about probabilities………… find your edge to give you a greater probability then place your bet…..
Tim Mack
Tuesday, April 20, 2010
Pre Market April 20, 2010
The bullishness we saw on the close yesterday carried through overnight. This kind of move can really piss off the bears. They have been waiting for a big corrective sell-off or even a continuation of the bear market (think Bob Prechter et al). I think they may get it but first the weak shorts have to be punished. They have to be taught that there is no such downward action that they will be a part of. As soon as that lesson is taught then down we go. Its like I mentioned yesterday, the market typically goes exactly the way you predicted AFTER you have been stopped out.
I don’t know if last nights 7.5 handle rally was enough to flush them out but we are sure to see an interesting open with lots of volume. You will also note that the break North of that 1190 area would lead to a target of 1197.50- 1204 as mentioned earlier. Again I don’t know if the overnight session has satisfied the rotation back to that area. We may need to see a RTH test of that area first.
We will open enough above yesterdays settlement of 1195.5 and yesterdays Value area high of 1193.25 to expect a trade toward those areas. If we cant get below the OR a few minutes off the open then we are probably still in a bullish mode and the gap fill players might have a lousy day.
I have resistance at 1205.75 and 1209.75 and support at 1195.5- 1193.25. These levels become invalid after the IB (first hour of RTH trading) is complete. As mentioned, I do expect a healthy open with high Paper volume. Cant wait…
Tim Mack
PS no reports today - some Fed speak but no one listens anymore.
I don’t know if last nights 7.5 handle rally was enough to flush them out but we are sure to see an interesting open with lots of volume. You will also note that the break North of that 1190 area would lead to a target of 1197.50- 1204 as mentioned earlier. Again I don’t know if the overnight session has satisfied the rotation back to that area. We may need to see a RTH test of that area first.
We will open enough above yesterdays settlement of 1195.5 and yesterdays Value area high of 1193.25 to expect a trade toward those areas. If we cant get below the OR a few minutes off the open then we are probably still in a bullish mode and the gap fill players might have a lousy day.
I have resistance at 1205.75 and 1209.75 and support at 1195.5- 1193.25. These levels become invalid after the IB (first hour of RTH trading) is complete. As mentioned, I do expect a healthy open with high Paper volume. Cant wait…
Tim Mack
PS no reports today - some Fed speak but no one listens anymore.
Monday, April 19, 2010
Post Market April 19, 2010
There were heavy Paper sellers off the bell. The locals got long and soon after buy paper started entering the pit. So it was a bit mixed and I wasn’t sure what to make of it as I had a bit of a bearish bias. But the bottom line was the first pull back found support above the 1 minute Opening Range 86.25-85.25. All other future index markets were above their respective opening range. Soon after JP Morgan sold 500 cars and the locals scooped them up. This just loaded up the locals long even more. Along with the screen gap fill traders this was a no brainer move higher to at least the 90.00 area and as it turned out, the IB (initial balance) high ended up at 1193.25. The problem with this move was the Naz was showing weakness. The Nazdaq (NQ) is often a leader, the ES a follower. This sheds big doubt that the rally will continue. When all the kids aren’t playing nice in the sandbox it sends up a big warning signal so that instead of scaling into a position and planting your feet above the OR,…. start scaling out.
Paper quieted down as we approached 93.00 where there was some large buy stops. This allowed the locals to cover their longs and reverse their position. From 93.00 it was all locals pushing lower and running into sell Paper. As soon as locals bought from Paper on the way down they flipped them in the mini. That’s a good sign that we will continue lower and we did.
I used to be those traders who had their stops resting on top just to watch the market trade my way as soon as my stop was taken out. It was so frustrating because fundamentally I was right but I was rarely on board after being stopped out. Now I understand what’s happening and I don’t get stopped out like I used to. Sure I take lots of trades at a loss because I’m wrong. That’s part of trading. But I don’t usually get stopped out and still be right. Its amazing that there are some huge traders swinging big lines and they haven’t figured this out. I am sure it has a lot to do with their risk manager being an accountant and not a trader.
The Kids I refer to are the index futures: S&P 500, S&P Midcap, Dow Jones Ind., Russell and the Nazdaq, all lined up on the bottom of my main screen. I think of them as kids playing in a sandbox. If they are all trading on the same side of the OR (playing nice) you can feel confident of the move and its my signal to scale into a position. The problem is when one of these brats stop playing so nice. I weight each a little differently and just like kids they all have different personalities. As I said above the NQ is a leader and is a great heads up. The YM (Dow) is often a follower but if he starts whining and wont play then you know that the move the NQ is on is unlikely to last. That was the situation today. All the kids except the YM traded below their OR and we appeared to be in for another nice sell off. But YM wasn’t playing.
Frankly I wasn’t sure what to expect because sometimes the YM will start to catch up but today he planted his feet (and I unplanted mine). The market started to rally. It met resistance at the OR hitting it a few times but as the YM refused to play, the locals started to get long and bid the market up. Once the other kids broke above their OR I figured we would test the high. I was a bit surprised how bullish it stayed closing on the high - the locals were bid the whole way. The Vix was breaking, settling at 17.34, the Ticks were making higher lows and the Trin was flat the whole day and never saw a minute above .60 until the close so I guess it shouldn’t have been much of a surprise we were so bullish. All the kids settled above their OR and the ES settled above its weekly close so things are looking bullish here the only saving grace is that the Vix is above 17. If that starts closing lower it will be back to my afternoon naps.
Tim Mack
Paper quieted down as we approached 93.00 where there was some large buy stops. This allowed the locals to cover their longs and reverse their position. From 93.00 it was all locals pushing lower and running into sell Paper. As soon as locals bought from Paper on the way down they flipped them in the mini. That’s a good sign that we will continue lower and we did.
I used to be those traders who had their stops resting on top just to watch the market trade my way as soon as my stop was taken out. It was so frustrating because fundamentally I was right but I was rarely on board after being stopped out. Now I understand what’s happening and I don’t get stopped out like I used to. Sure I take lots of trades at a loss because I’m wrong. That’s part of trading. But I don’t usually get stopped out and still be right. Its amazing that there are some huge traders swinging big lines and they haven’t figured this out. I am sure it has a lot to do with their risk manager being an accountant and not a trader.
The Kids I refer to are the index futures: S&P 500, S&P Midcap, Dow Jones Ind., Russell and the Nazdaq, all lined up on the bottom of my main screen. I think of them as kids playing in a sandbox. If they are all trading on the same side of the OR (playing nice) you can feel confident of the move and its my signal to scale into a position. The problem is when one of these brats stop playing so nice. I weight each a little differently and just like kids they all have different personalities. As I said above the NQ is a leader and is a great heads up. The YM (Dow) is often a follower but if he starts whining and wont play then you know that the move the NQ is on is unlikely to last. That was the situation today. All the kids except the YM traded below their OR and we appeared to be in for another nice sell off. But YM wasn’t playing.
Frankly I wasn’t sure what to expect because sometimes the YM will start to catch up but today he planted his feet (and I unplanted mine). The market started to rally. It met resistance at the OR hitting it a few times but as the YM refused to play, the locals started to get long and bid the market up. Once the other kids broke above their OR I figured we would test the high. I was a bit surprised how bullish it stayed closing on the high - the locals were bid the whole way. The Vix was breaking, settling at 17.34, the Ticks were making higher lows and the Trin was flat the whole day and never saw a minute above .60 until the close so I guess it shouldn’t have been much of a surprise we were so bullish. All the kids settled above their OR and the ES settled above its weekly close so things are looking bullish here the only saving grace is that the Vix is above 17. If that starts closing lower it will be back to my afternoon naps.
Tim Mack
Pre Market April 19, 2010
We 1 ticked the low in the overnight session and didn’t find any Globex sellers under there. We are in limbo until the Regular Trading Hours (RTH) start at 9:30 ET. We will probably test this area today but it all depends on the opening bell. Traders had the weekend to mull over the Goldman issue and everyone expects at least a pull back from this relentless climb up over the last month or so.
There may be an initial flush of Sell Paper on the open with other Paper sitting on the sidelines to see how the market trades, but if the locals absorb all the sell paper they will be "size" long and if they can hold the market above the OR (the first minute of the RTH session, this differs from the opening range set by the Merc where initial orders are required to trade) they will get a lot of help by those gap fill traders and we should see the 1990 area. However in my world that gap is considered already filled in the overnight. Way too many traders are playing while I’m getting my beauty rest.
I have a number I like to keep a close eye on - it’s the 8 day moving average (simple) of the average daily Value Areas. To me this is the average Value over the last 8 days. Admittedly, it works better when we have consistent ranges and Friday was as inconsistent as it gets but its worth having on my trade sheet as a bias toward the market. Right now the number is 1,189.75. This lines up with the settlement of the last trading day the weekly close and Fridays Point of Control (POC) so that’s an area I will be keeping a close eye on. If we trade above with conviction and acceptance we could be taking at trip to 1197.5 - 1204 area. If we reject it we should see new lows. Can’t wait to see how it plays out.
Tim Mack
There may be an initial flush of Sell Paper on the open with other Paper sitting on the sidelines to see how the market trades, but if the locals absorb all the sell paper they will be "size" long and if they can hold the market above the OR (the first minute of the RTH session, this differs from the opening range set by the Merc where initial orders are required to trade) they will get a lot of help by those gap fill traders and we should see the 1990 area. However in my world that gap is considered already filled in the overnight. Way too many traders are playing while I’m getting my beauty rest.
I have a number I like to keep a close eye on - it’s the 8 day moving average (simple) of the average daily Value Areas. To me this is the average Value over the last 8 days. Admittedly, it works better when we have consistent ranges and Friday was as inconsistent as it gets but its worth having on my trade sheet as a bias toward the market. Right now the number is 1,189.75. This lines up with the settlement of the last trading day the weekly close and Fridays Point of Control (POC) so that’s an area I will be keeping a close eye on. If we trade above with conviction and acceptance we could be taking at trip to 1197.5 - 1204 area. If we reject it we should see new lows. Can’t wait to see how it plays out.
Tim Mack
Sunday, April 18, 2010
Pre-Pre Market
If I had to make a guess right now it would be that we make a test of Fridays lows. Depending what we find there we set the tone for the next meaningful move. We bounced off that 50% retracement and closed well enough below the OR and the prior weeks settlement to suggest more weakness. Its Sunday morning and Globex hasn’t opened yet so I’m working on Fridays settlement information only.
The market will decide if we just “1 Tick” the low, find nothing there and head back to the 1203-1204 area. Or we find aggressive sellers which will auction the price lower by taking out the bids. The 1 tick is a common trick of the trade of locals. I will cover it in great detail in a later post.
Nevertheless, it doesn’t matter what my opinion is or what any technician’s opinion might be. What will happen is either the collective opinion of traders who have the ability to move markets will be likeminded or they won’t. That will influence the open and often the day.
Here is an example:
If Merrill Lynch is a big seller on the opening bell and there are no other sellers, the locals will be long from selling to Merrill. As long as no other Sell Paper enters the market, the locals will bid the market up selling 1 lots along the way up. When a trade occurs the participants signal a clerk at a podium overlooking pit. The clerk enters the price and this is then transmitted to screens around the world.
The outside world (Paper) sees the higher and higher prints. They think “gee wiz the markets are rallying north - gotta get long, gotta get long!!!”. This is just what the locals are looking for. Remember they are long and are looking to cover their longs by selling them to paper at higher prices for a profit.
With prices auctioning higher, the buyer enters the market. The locals know that Paper are like terminates, if you see one, you know more are nearby. Its funny, they will get very aggressive after that first buyer comes in because they have some assurance that the outside world wants to buy and they are more than willing to sell to them at the highest possible price they can manage.
They also know that the first Paper entering orders could be a seller. They don’t know if their efforts bidding the price higher will attract buyers. No one knows, I repeat NO ONE knows, All you can do is take a shot and watch very closely for signs if you are right or wrong. If you are wrong it’s no big deal because NO ONE can predict what Paper traders are thinking or about to do. This is a game of “probabilities”. So if you are long like the locals in this example, and you are above the OR and you don’t meet Paper Sellers, the “probability” is that the market will continue to auction higher and higher.
The longer the market stays above the OR the more the outside world will “probably” believe the market will continue to trade higher and buyers will continue to enter the market. Locals will continue on their mission pushing the market higher until they have a reason to sell. Sometimes after finding those buyers they flatten up. The market will quiet down and trade in a tight range. If you don’t have Paper entering the markets and the locals don’t have a reason to be aggressive on one side or the other, the market will rotate in a range where buyers and sellers agree on price or both sides find “value”.
Locals are standing in the pit to do only one thing - make money. So its time like this that they will often gun for the high or low, whatever is near by, to see if they can generate activity. Usually there are stops near these levels and they are masters at picking them off. As they saying goes… “No stop in the S&P ever goes untouched” that story is for a later post.
Also I will provide a view on how the electronic market (which I trade) and how the “Dentists from Iowa” influence the market. Theses too will be another post so stay tuned for more tails from the pit.
Tim Mack
The market will decide if we just “1 Tick” the low, find nothing there and head back to the 1203-1204 area. Or we find aggressive sellers which will auction the price lower by taking out the bids. The 1 tick is a common trick of the trade of locals. I will cover it in great detail in a later post.
Nevertheless, it doesn’t matter what my opinion is or what any technician’s opinion might be. What will happen is either the collective opinion of traders who have the ability to move markets will be likeminded or they won’t. That will influence the open and often the day.
Here is an example:
If Merrill Lynch is a big seller on the opening bell and there are no other sellers, the locals will be long from selling to Merrill. As long as no other Sell Paper enters the market, the locals will bid the market up selling 1 lots along the way up. When a trade occurs the participants signal a clerk at a podium overlooking pit. The clerk enters the price and this is then transmitted to screens around the world.
The outside world (Paper) sees the higher and higher prints. They think “gee wiz the markets are rallying north - gotta get long, gotta get long!!!”. This is just what the locals are looking for. Remember they are long and are looking to cover their longs by selling them to paper at higher prices for a profit.
With prices auctioning higher, the buyer enters the market. The locals know that Paper are like terminates, if you see one, you know more are nearby. Its funny, they will get very aggressive after that first buyer comes in because they have some assurance that the outside world wants to buy and they are more than willing to sell to them at the highest possible price they can manage.
They also know that the first Paper entering orders could be a seller. They don’t know if their efforts bidding the price higher will attract buyers. No one knows, I repeat NO ONE knows, All you can do is take a shot and watch very closely for signs if you are right or wrong. If you are wrong it’s no big deal because NO ONE can predict what Paper traders are thinking or about to do. This is a game of “probabilities”. So if you are long like the locals in this example, and you are above the OR and you don’t meet Paper Sellers, the “probability” is that the market will continue to auction higher and higher.
The longer the market stays above the OR the more the outside world will “probably” believe the market will continue to trade higher and buyers will continue to enter the market. Locals will continue on their mission pushing the market higher until they have a reason to sell. Sometimes after finding those buyers they flatten up. The market will quiet down and trade in a tight range. If you don’t have Paper entering the markets and the locals don’t have a reason to be aggressive on one side or the other, the market will rotate in a range where buyers and sellers agree on price or both sides find “value”.
Locals are standing in the pit to do only one thing - make money. So its time like this that they will often gun for the high or low, whatever is near by, to see if they can generate activity. Usually there are stops near these levels and they are masters at picking them off. As they saying goes… “No stop in the S&P ever goes untouched” that story is for a later post.
Also I will provide a view on how the electronic market (which I trade) and how the “Dentists from Iowa” influence the market. Theses too will be another post so stay tuned for more tails from the pit.
Tim Mack
Friday, April 16, 2010
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
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
BTW
Last weeks close was 92.50 so closing above or below this figure can influence how markets behave next week
There is a report at 9:55 ET so I wont initate any trades near that time.
There is a report at 9:55 ET so I wont initate any trades near that time.
Friday April 16 pre market
As of this writing 9AM, the market is trading just below yesterdays OR and appears to be finding a home there.If we open below 1205.5 this would suggest more downside activity. There is a lot of energy built up in the markets and if there are any short sellers left.... they will pounce on any sharp move down. There is support at the 1197-1198 area and 1188-1185 area.
Index options expire on the open and other options expire on the close, Monday is settlement so this usually brings extra ordinary activity.
The bottom line on the open is this...no one knows what big houses who move markets are going to do, nobody can predict it and if you think you can then you are flipping pennies. You will be right as often as you are wrong over time. You get burned when you start flipping fat tails, meaning that you are on a winning streak of being right and start placing heavier bets to suddenly learn you are wrong.
Paper (brokerage firms) will open on the bell either a big seller, big buyer or mixed, the locals will take the other side. If paper sells, they will buy. If its only one house doing the selling the locals will hold their longs and bid the market up and they can do it because they don't have resistance from other brokers who are selling. If several houses are selling they will cover their longs in the mini and join in on the selling, so you see they simply go with the flow of the market.
70% of locals in the S@P pit were there in 1987 so they learned (and survived) that it doesn't pay to fight the flow when its bigger than they are. Good words to live by as a day trader.
Tim Mack
Index options expire on the open and other options expire on the close, Monday is settlement so this usually brings extra ordinary activity.
The bottom line on the open is this...no one knows what big houses who move markets are going to do, nobody can predict it and if you think you can then you are flipping pennies. You will be right as often as you are wrong over time. You get burned when you start flipping fat tails, meaning that you are on a winning streak of being right and start placing heavier bets to suddenly learn you are wrong.
Paper (brokerage firms) will open on the bell either a big seller, big buyer or mixed, the locals will take the other side. If paper sells, they will buy. If its only one house doing the selling the locals will hold their longs and bid the market up and they can do it because they don't have resistance from other brokers who are selling. If several houses are selling they will cover their longs in the mini and join in on the selling, so you see they simply go with the flow of the market.
70% of locals in the S@P pit were there in 1987 so they learned (and survived) that it doesn't pay to fight the flow when its bigger than they are. Good words to live by as a day trader.
Tim Mack
Thursday, April 15, 2010
On The Close and Recap
So we had a big paper seller on the opening bell, locals got long and they were able to bid it up past yesterdays high but didn't find any buyers to sell to. The market drifted back down to the opening range and found support for another trip up near the highs. For a brief moment i actually thought we may get a close below the opening range but instead we continue to build higher and higher value. The 8 day SMA of value is at 1,187.81 as long as we are above this number we are bullish.
On the cash close there were paper sellers with the exception of Merrill Lynch, they were buyers. When Merrill is a buyer you want to be a seller. They are like the 'ol Lind Waldock of yesteryear. We love to hear them come into the market because we know price will trade against them.
For tomorrow we have housing starts at 8:30 and consumer sentiment at 9:55 ET, I think this report gets out early to subscribers so be careful if you don't have a cush on your trade by then. If we open above 1204ish we are likely to see higher prices.
Tomorrow is Friday and the weekly settlement is an important area. Last week we settled at 1192.50. I think we also have options expiring so we could get some volatility near the close.
One thing esp. noteworthy is the wedge we are building in the Vix over the last few days this combined with low ARMS reading may be a warning of a trend change or at least the long awaited pull back. But again as of this close with higher value and above the OR we are still looking north, no sign of a reversal today.
On the cash close there were paper sellers with the exception of Merrill Lynch, they were buyers. When Merrill is a buyer you want to be a seller. They are like the 'ol Lind Waldock of yesteryear. We love to hear them come into the market because we know price will trade against them.
For tomorrow we have housing starts at 8:30 and consumer sentiment at 9:55 ET, I think this report gets out early to subscribers so be careful if you don't have a cush on your trade by then. If we open above 1204ish we are likely to see higher prices.
Tomorrow is Friday and the weekly settlement is an important area. Last week we settled at 1192.50. I think we also have options expiring so we could get some volatility near the close.
One thing esp. noteworthy is the wedge we are building in the Vix over the last few days this combined with low ARMS reading may be a warning of a trend change or at least the long awaited pull back. But again as of this close with higher value and above the OR we are still looking north, no sign of a reversal today.
End of Day
Typical last hour of trading of late, there is NO paper entering the pit and the markets just chopping around, locals playing hot potato in the pit. One day we will get back to normal volatility and we will see volume come in the last hour but until then we should be glad that we are seeing 5 whole handles of RTH range. Whoo!!
Tax Day
Looking at the daily returns for April from 2000-2009 April 15 has the poorest return for the month. You would think since we are falling into the turn date window of April 14-19 that this would be an ideal date to initiate a long awaited sell off.
Not the case. Although there was paper sellers off the open in the Spoos the locals have been able to keep the market above the opening range(OR) , Spending time above the OR will attract buyers and piss off sellers who will eventually give up and short covering rally may finish the day. We are at 1209 even as of the writing. Notice how we 1 ticked the OR low another sign of bullishness. Lets see what the afternoon brings but so far I haven't seen a change in the "Continuity of Thought" that would suggest we are changing direction - keep in mind that could change before you read this post - So trading goes.
Not the case. Although there was paper sellers off the open in the Spoos the locals have been able to keep the market above the opening range(OR) , Spending time above the OR will attract buyers and piss off sellers who will eventually give up and short covering rally may finish the day. We are at 1209 even as of the writing. Notice how we 1 ticked the OR low another sign of bullishness. Lets see what the afternoon brings but so far I haven't seen a change in the "Continuity of Thought" that would suggest we are changing direction - keep in mind that could change before you read this post - So trading goes.
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