Jun 032010

Pretty quiet this morning as expected given the uncertainty and the huge overhead resistance. I didn’t anticipate the volume being so light though. There must be a lot of people waiting for these few key upcoming news items to point the way. Again, it just shows the magnitude of the levels we are trading at right now. 1092 is the center of the single most important cluster in terms of volume that has traded since October 2007. That is the most important dividing line right now for position traders. Bullish above, bearish below. Not to mention 1100 being such a key psychological spot too. It really makes sense. Are we confident enough in a global macro sense to make the jump above this key 6.75 level? If so technical traders probably see the mid 70s as being the next major test area. If not, the mid 50s which is position trader support right now will need to be tested. So we have a good 50-70 handle bracket around the market right now and we are at the center line essentially. This uncertainty made us pass on the few ops that came up today. First was the first push up to the OH that didn’t quite get there. It was in the basic range, but I was really uncomfortable with betting it unless we came a bit closer to testing the high. Like I said pre-market I wanted to err on the high side in conditions like this. So we did get the nice clean retest with institutions selling into it, but we passed as it was just too far from the high in the low end of the range. If you did happen to take it, you did well I’m sure. It was a VERY powerful setup, but just in the wrong spot for me and I couldn’t put the probability high enough to take it. I say it is very powerful because you will note it has a strong trap component coupled with institutional selling and a clean print failure on the high of the retest. 

There was also a second trade that looked interesting but we passed on better judgement. Too bad because this one was a winner too. We closed the gap and bounced off but again, I just wasn’t willing to bet it with the low being so close to the OL which I knew was a little fragile. Probability-wise I felt there was too much of a chance it would reverse again quickly and probe down to at least test the OL. As it turned out it didn’t and you will note this one had a nice trap component as well as some good institutional buying of the lows. I’m never ashamed to say we passed on a trade as I know a big part of our success comes from what we don’t do – maybe the biggest part. As said in poker, “I can’t lose what I don’t put in the middle”. I like to bet when I feel like I have the best hand and I just couldn’t say that about either of these this morning. There is also a human element. I’m a little tired and I have a conference call and a meeting later and I just didn’t have that “wild” spark today. What I mean is that some days I would trade them and be in the mood to scalp so I would be willing to just feel it out and if it stalled I would just hop out with a tick or two of profit or loss and feel like it was a gamble worth taking. Of course if I did that today I would have two nice winners instead of a blank spot in the book. Oh well, what can I say? The great RG doesn’t catch them all. Hahahahahaha. But seriously, it will be interesting to hear how many of you liked these and how many passed as we did because they didn’t fall on the right side of the level ranges…

 Posted by at 12:00 pm

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