By Sellputs
This morning we had a weak tape,(futures down, market traded down from gap price) I did not read much into the down open because we have been up triple digits the past two trading days. I approached shorts with caution because we gapped down and sold off rather fast on a steeper than average slope. *Shorting an already gap down market is never a high probability trade. Lately i have been waiting for a clear trend to develop before jumping into the deep end. Today was a great example of patience, UNLESS you are an extremely fast scalper, you should practice patience. IF you are a fast scalper you could have played the market short then long, but if you were patient, like myself, you would have seen the market was giving us signals it was going higher.
The signals i picked up were:
1. Individual big cap stocks flattened out on the charts as the SPY was losing steam.
2. Bullish media spin still in play the from the past few sessions.
4. The put selling in the SPY FEB 106, which was slightly out of the money. Some trader was refreshing 5k lots on the offer while SPY was sitting at support of 106.60. Clearly this was the PPT using an undercover method of holding the market. Manipulation via ETF.
5. The SPY piercing its downtrend with one big candle, was THE reversal signal. BLUE circle
The market gives out so many signals, the key is to find a signal you really can latch onto and listen for. I really latch onto volume indicating direction, whether that volume is in the options and or stock, does not matter. Volume always precedes price, no matter what the direction. Scenario recognition which you learn with time in front of a computer and or reading the tape can help you make quick decisions, helping to preserve profits or eliminate losing trades.
Someone is clearly not letting this market trade naturally, the gyrations we have today are in clear response to selling pressure, the VIX is low.. why the movement like this? You got me.
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