There has never previously been more than 10 consecutive red/green alternate closes on SPX before.
Today is the 10th alternate cash close (which was red), so based on history, the probability of a green close tomorrow is zero.
Also the 1st trading day of December has been bearish in recent years.
Personally I’ve no idea what tomorrows direction will be, but for some reason I’m seeing a bullish bias but probably best to see how supportive the hourly 200 MA is before making any trading decisions.
Now 11 consecutive alternate red/green U.S cash closes. A new record.
I’m currently holding a small long from 17,832 so hoping bulls will break the cycle with another green close tomorrow, though I’ll probably consider covering the position before FOMC, or at least having a sensible stop loss.
The 17,700 short I took on 18th Nov which I forgot to update on, I closed it the following day on the opening bell for break-even.
Agree that times seem dangerous, even though the charts don’t look dangerous at first glance.
I’ve had a few, well, a lot of trades that don’t even go a single pip in my favour to cover the spread cost before suddenly being 100+ points under water!
However, price is overlapping itself considerably so despite something looking really bad initially, most trades I have managed to hold out to eventually take breakeven or a small loss or a small gain.
It does seem the key to surviving this is small affordable stakes (learnt that the hard way mind).
I covered a USD:JPY short at the very highest pip it went to before selling off in mid November, and I closed a NZD:JPY long at the lowest pip it went to (18th Nov) before it rallied hard. Sometimes I wonder, how is this even possible to nail the highest or lowest pip before a major trend change against you!
As for that DOW long, I sat through it yesterday (it went to -135 points), then couldn’t believe it when it showed a profit this morning so put the stop at b/e which was eventually taken out.
I shorted DOW earlier today at 17,803 with 120 point stop. It was only a 50p position. Literally got home 20 minutes ago and closed it at 17,443 to take +360 points profit! I was half expecting to see it still around the breakeven level, couldn’t believe it when I saw almost £200 profit and had to double check it really was a 50p stake!
Really don’t know what to make of today. Seen a few comments today about people wanting to throw the towel in.
I shorted what I believed to be a strong technical confluence… Fib levels (61.8 on DOW hourly), 100 / 200 / 50 MA’s and EMA’s converging or likely resistance on most time frames, very poor breadth throughout the early rally, and with continued lower highs yet price being 300 points off yesterday’s low, and MACD hadn’t produced positive divergence on any time frame prior to the rally, everything was shouting out for a short.
I literally shorted 10 seconds before Draghi spoke, but he only reiterated what he said yesterday so with the initial spike in Indices I checked EUR:USD and its reaction was very mild (yet Draghi’s speech was aimed at the Euro), so with stops above yesterday’s high I left the trade to work.
In the end I couldn’t bear to hold on any longer and closed for a fair loss towards the day’s high in the last hour.
Bulls haven’t been able to make 2 consecutive green closes in almost 3 Weeks so its hard to imagine bears are over, will have to wait and see on Monday.
Whatever the outcome, days like today make a mockery out of the use of T.A.
I think Cobra summed it up perfectly with this statement:
“I’m speechless, cannot help thinking of throwing all TA books, theories, everything I learnt and once firmly believed away, because it seems nothing really matters, trading requires nothing but imagination, BULL imagination.”
I do ponder if the market volatility/lack of TA is being driven by HFT. It appears that if you have the muscle (money) it is possible to drive the market which ever way desired. No need to buy or sell the shares just trade the derivatives by means of HFT.
JPM Head Quant warns of the following surrounding December 16th FOMC:
This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. Clients are net long these puts and will likely hold onto them through the event and until expiry. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market.
What does this mean? Considering that the bulk of the puts have been layered by the program traders themselves, including CTA trend-followers, and since the vol surface of the market will be well-known to everyone in advance, there is a very high probability the implied “stop loss” level will be triggered, and the market could trade to a level equivalent to the strike price, somewhere in the 1,800 area, or nearly 200 points below current levels.