There was a lot going on this morning which had the potential the impact the stock markets. The election situation in Italy has refocused attention on European debt problems. In the US, automatic spending cuts go into affect on Friday, March 1 and Ben Bernanke was to testify to Senate Banking Committee for a couple of hours starting at 10am EST. There was also New Home Sales and Consumer Confidence numbers at 10am EST. Thus, I wanted to sneak in a trade before the reports and a short opportunity unfolded in the form of a double top in the DTG 93.25 level a few minutes after the cash open. Unfortunately it didn’t move far enough before 10am EST rolled around and volatility kicked in.
The economic numbers beat expectations handily but that was tempered with warnings from Bernanke about the affects of the automatic spending cuts on GDP. The ES moved to the DTG 90.25 level and then the DTG 84.50 level. The whole way down I was watching order flow, looking for buyers to step in. That never happened, but price did rotate back up to the DTG 90.25 level. The trend was down since the 10am EST news, so it was time to shift gears and look for a short opportunity from the DTG 90.25 level. One did unfold and is today’s example trade.
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