Wednesday, December 31, 2008

When Program Selling Cannot Push The Broad Stock Market Lower

The blue lines represent 10 period moving averages for one-minute charts of the ES futures (top chart); Dow TICK ($TICKI; middle chart); and NYSE TICK ($TICK; bottom chart); click on charts for detail. One of my very short-term setups occurs when we get selling pressure in $TICKI that is not matched by commensurate selling pressure in $TICK. This typically occurs when program selling affecting large cap issues are not pulling the broad market lower. By waiting for the program selling to abate, as it did prior to 2 PM CT, we can often catch a nice pop up in the ES futures, as the large caps catch up to the broad market strength.