Mar 222010

Today is a GREAT day to study and learn from if you happen to be one who still thinks a specific set of rules and/or rigid systematization is the key to intraday success. The market had every fundamental and technical reason NOT to break out of the OH and the rest of the levels it steamrolled through today. But it did anyway. Not everyone has the tools to see deep inside the markets in terms of volume, but we do and I will tell you that I haven’t seen short side volume in the Eurex markets like last night in quite some time. Friday’s end of day rally was clearly short covering and final close outs of options for expiration, but overnight the selling, and particularly institutional sized selling was HUGE as I said pre-market. Nearly 70% of institutional volume was to the short side which is rare. We felt really good about fading the OH and the perfect storm worked against us today. About 2 ticks shy of the OH, price started stalling and exhibiting just the failure behavior we like to see for entry – then BAM. Right after I pulled the trigger it reversed and ripped through the orders like a steamroller. After the high was broken it was clear that a good deal of the big trader stops who gotshort pre-market were on the other side of the big volume cluster from Friday, so when we crossed over and¬†those started getting hit it was just gasoline on a raging fire. Unfortunatlely, there was no great spot for us to get in, and we don’t typically trade after 10:30 for liquidity reasons. I did short the center of that Friday cluster and picked up 3 ticks to finish us at even minus two commishs’. When the market pulls a mind scramble like today we are always happy to end up even or stuck a fee or two. You can’t win them all but you can strive to trade as good as you can so you can be confident your losses are not a result of a mistake or unclear thinking, but just the market showing you who is boss. Respect your Mother boys and girls. And watch out cause she just might throw a show at you when you least expect it…

 Posted by at 3:39 pm

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