May 192010

Wacky market today to be sure. We could see the order flow leading the break of the OH and I also just felt it would fail given the overall sentiment. It was volatile but for a while there you could just feel the optimism pouring in.  You will note that there were no trap setups around the OH and the first real stall was in the 21-23 range which I had no interest in expect to scalp. It just wasn’t a strong enough level in my view as there was too much low volume all around it making it difficult to tell if it would stop dead or run away at any second. There was a nice big trader confirmation setupthere which shows our discipline. It confirmed and led the HUGE selloff and shift to the short side but since it didn’t occur at a level we chose pre-market we stood aside, didn’t react and refused to chase it. Nextwe got down to the 12-13 handles where there was a good scalp op. I didn’t snap this area though as it didn’t fit in. Next we hit the 7 handle which was my pre-market pivot/acceptance area that I liked for a scalp. Finally we had the OL stuff. First you could get the scalp on the first push. On the second push a Mousetrap set up which if you traded to the first acceptance center was worth a couple handles. And finally a Biglot setup followed which if traded to the next acceptance/edge of volume value area was worth almost three handles with a risk of 6 ticks or so. You had to be patient today and not get sucked into trading weak levels, but if you did  most all of the order flow setups worked like clockwork. Institutions really helped today at the OL as they really pounded some buy orders in there and continued to reload them. Those letting profits run and/or with longer targets had a field day today I’m sure. For those hanging around I would strongly advise against trying to fade the OL again. I think it is likely to break if we get all the way down again. Wait and look for something around 1098 or so. I doubt we make new highs at this point but then again trying to call direction on a day like today is silly at best. If we do rip up I would again advise waiting for maybe 27 or so to scalp the pivot/Monday closing VWAP and/or scalping/fading 29/30 or so which is just under the major previous support area. Happy hunting and good luck and be careful…

 Posted by at 11:07 am

  4 Responses to “5/19/2010 Post Trading Analysis”

  1. I am glad you guys think this is wacky too!! LOL I got long right after the open. Euro was rallying also. Kind of got shook out early on it, but made 6 ticks. shorted at 21.25, but I missed the first rotation, and had to take a stop out, -4 ticks.At that point it looked like it may be going to 30. Then it got really crazy from there. I get concerned about trading when you see so many levels printing with 0 or very few trades. Thanks for your analysis and for the tips about watching the euro and 10’s. I am watching the 6E and ZN06, seems to give some extra confirmation.

  2. RG,

    Nice call on the 1098 low. I had that level marked off also. Nice to see I am concurring with your levels. RG: “there will be lots of position buyers there” Why did you think 1098 would have position traders there? Is it the buying tail from below?


  3. It is just a really important level that’s all. It is the last of the at least semi-legit auctions that we had within the selloff last week. It is also the major 1100 handle and where I happen to know JP basically bought it all on the day of the crash right around that price. ML too. You will also note it is basically the center of the composite profile cluster – the biggest on the visible chart. It is a very well established support level among many TF traders…

  4. Guys – great market commentary – really appreciate it! Very helpful.

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