Mar 152010

The weight of the buyers finally broke and the majority of Friday volume poured into the short side as the longs began to panic sell. This is offset this morning however by manufacturing showing signs of strength. Maybe if industrial production numbers at 9:15 are strong it will be enough to push us into a retest of key highs from overnight and Friday. If not, we may continue to sell off. We don’t like selling the overnight low so much though because it would be trading into a strong cluster of support and likely ranging conditions between the 40 and 36 handles. It is too much of a gamble where it stops so there isn’t enough meat on that bone for us. We will consider fading a move to the overnight lows long, but probably only for a scalp or not at all if signs of selling are in. We also like fading retests of key highs but there are really three of them to watch and it is all about order flow to see where the failures are. Fades are at 44 1/2, 46, & 50 potentially. These are overnight, Friday night and Friday day session highs. A couple of great longs are possible too. A quick scalp at 45.25 into the overnight high test at 46.50 is one. Long at 47 into the test of Friday highs at 50ish is the other. Remember, there is no point getting in early for breakouts. We always wait until price is clear away from volatility at key levels where it has nowhere to go but into the test areas.

 Posted by at 9:31 am

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