6/1/2010 Post Trading Analysis

WOW! Like I said, the news wouldn’t matter unless it was significant and boy was it. ISM and construction spending were both amazing. We have just seen such follow through all around that it doesn’t surprise me we didn’t get much to sink our teeth into. The selling in the 10’s, the buying in the EUR and the optimism shown in the carry cross have been sustained to say the least. You will also note what I had said about the levels on the way to the OL being sort of “iffy” turned out to be very accurate. Notice how the OH was so populated and those who didn’t have the volume info made a BIG mistake blindly fading it. Run over and flattened like a steamroller. LOL. You have to focus on the HUGE acceptance are from Sunday overnight centered around the 94 handle and then from Friday’s session at the 95 handle. Remember, high volume clusters are magnets for price, especially when coming out of a big tail. We ended up taking it one step further given the strong uptrend and deciding we would pass on any opportunity until we reached the 96 handle because of all this. Not that it was too tough though as there was really nothing that set up in terms of traps or failures or institutional selling anyway. The only trade that came up was a Biglot not far after the open on the THIRD solid retest of the low volume area between 78-80. It stalled shortly after the trigger and as such the best that could be done was to come out at even and give up some commish. One good thing about our trades is that because we are using psychology and how multiple reasons for consecutive up or down ticks contribute, we generally will “win it right there”. If it stalls it really means the psychology for whatever reason never took hold and most times that means a stop out. Generally I will feel it out and 9 times out of 10 I’ll just come out at even or a tick or two loss. It is rare that I will go out at the theoretical protectionary stop price. Anyway, this was the first time that I ever had to draw an entry and exit at the same price on the blog chart. A box inside a box if you will. LOL. For those sticking around, I do think 96 is probably still the best short of the day but then again if you get strong momentum breaking the current 94.50 high maybe it doesn’t hold. An easier trade would be to maybe look for something on a retest of the 80.50-81.50 handle which may well hold as a new support. Given the magnitude of the rally, I think that 74 is most likely the new interim support, but this rally is WAY over blown and I think we will retrace to at least 86 if not 81 before the close. Happy hunting…