Jan 252013
 

trade_130125

I came into this morning thinking the magical 1500 level of the S&P 500 was going to retested and buyers would try to push to new highs.  Germany posted some strong economic numbers overnight and then Procter and Gamble came in with strong earnings.  The stage was set for the bulls to rally in the morning.  The only thing that could slow it down was the 10am EST Housing Starts numbers.  Earlier this week, the existing housing sales numbers rallied the bulls and now housing starts could do the same.  The ES moved up early and quickly, providing no good opportunity to get long.  I wanted a pull back with decent buying.  I did get my pull back in the first 10 minutes after the cash open, but there was a strong selling and the buyers never took control.  I thought I had missed the boat for the drive to new highs.  The ES double topped a minute or so before the housing starts number, sellers started coming in and CNBC announced the numbers.. they missed pretty big and I knew a temporary top could be in and got short.  The institutional sellers showed they were getting out.  Now, because price action was quick and the trade was a reaction to news, I’ll use the next trade opportunity for the example trade.

After the news, the buyers tried to continue their quest of taking the 1500 summit, but after about 20 minutes, the opening gap to yesterday’s close at 91.75 was filled.  The ES next started displaying some bottoming action with a potential head fake low into the pivot point in the DTG 89 level with the buyers taking interest.  Price rotated down again for a double bottom with little prints, providing another long entry opportunity.

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