Friday, February 23, 2007

Friday, February 23rd Morning Market Comments

9:27 AM - Clearly we didn't get the buying interest; once again stopped out. That TICK distribution is all important, and in retrospect I was bucking it and holding too long onto a strength scenario. Food for review and learning this weekend! Have a great weekend; wrap up on the Weblog tonite.

9:19 AM - Well, we'll either hit my target or my stop. I'd be stopped out on new lows for the day and the initial target would be that average price range for ES.

9:17 AM - Once again, I tried a little buying as we failed to make lows on the recent selling, but stops are tight and I'll need to see solid buying coming in. My basic idea is to buy as long as we stay above yesterday's lows; I'm not impressed with the breadth of selling today relative to yesterday, so have been leaning toward buying weakness. We'll see if that works out. The key is to keep position sizing and stops reasonable to survive being wrong!

9:10 AM - Note semi and NQ strength here.

9:05 AM - Need to see more strength in ER2 and TICK and ability to hold lows before retaking long side. Looking at bounces as potential selling areas, particularly if TICK and volume are weak on the bounces.

9:02 AM - Stopped out as ER2 and TICK weakened. Watching those bounces carefully now.

8:55 AM - I'm going to have to wrap up shortly, but my basic strategy will be to buy pullbacks in the TICK as long as those occur at higher TICK lows and price stays above its lows. Otherwise I'm out.

8:52 AM - The nice thing about entering positions small and then adding to them if conditions are right is that you can more easily ride initial shakeouts. We need to see a positive shift in the TICK and we need to see ER2 strength, or I'll be out of that initial position quickly.

8:48 AM - Bought a little ES on that last drop, but will have tight stops; seeing if support from yesterday PM will hold.

8:42 AM - Note some relative strength in the semis early on; keep an eye open.

8:38 AM - I'm looking to see if we can put in a bottom and get selling to dry up above the Thurs afternoon lows. That would make me a buyer for a move back to that average price we've been oscillating around. If we break those lows, esp on strong volume, I'm in the mode of selling TICK bounces. During early trade, I try to frame these what-if scenarios to guide my strategy in advance. That helps me pounce more quickly if opportunity arises.

8:35 AM - Volume pretty tepid so far in ES; nothing to write home about, and nothing to suggest thus far an active institutional presence for a trending trade. Volume skewed toward the hitting of bids; weakness in ER2 has led ES in opening minutes.

8:32 AM - Note that we've already broken overnight lows in NQ and ER2. Need to see them acting stronger before I'd take the long side.

8:19 AM - So far we're looking at 1459.25 as near-term resistance in the pre-opening market and 1456.50 as near-term support. I was impressed, given the intensity of selling, that the market held its AM lows during the afternoon. I'm looking for those afternoon lows to hold in today's trade. If they don't, that clearly represents fresh selling interest and would be a bearish indication. If they do hold, I'd expect us to take out the pre-opening highs and the afternoon high of 1459.75 as initial targets. Morning weakness and afternoon strength has been a common pattern in the past several weeks. This suggests that selling is finding buyers: there's been an underlying bid to this market. Note that semis were strong yesterday; let's see if this is something more than a one-day wonder. This is often a leading sector. Note also that we held above Wednesday's lows in ER2 and NQ, even as we made a day-over-day low in ES. That also suggests some underlying strength to the broad market. Back after the open.

8:09 AM CT - Good Friday morning to you. This will be an abbreviated morning session for my blogging, as I have a 9:30 AM appt. No economic releases scheduled for today; that, on top of a Friday trade, may keep us in the recent multi-day trading range, as prices have pretty much oscillated around the 1458-1459 level in the ES futures for over a week. In addition to the day's pivots, the Weblog also summarizes an intraday trading pattern that has worked well over the last few weeks; do check out. Many thanks to those who participated in my online chat session hosted by John Forman; the audio archive is now up. My most recent blog post summarizes a few of the points from that session. More in a few.