Friday, June 29, 2012

S&P Morning Update for June 29, 2012

As I stated in my post last night - the market got too short in the day time frame which gave way to a late afternoon rally. Coupled with the positive news from EU leaders - the market has gapped up 20+ handles in the overnite session. Large gaps such as these do not usually get filled the same day (unless there is some extreme negative news). In addition, the day may turn into a rotational day as the market absorbs the news. 

On the upside your best reference is a series of close highs - 1352.50 - 1355.50 and 1357 - the high of the larger balance area. On the downside you have 1331.75 - the high of the lower balance area. 

We have Chicago PMI at 9:45 am EST and Consumer Sentiment at 9:55 am EST. More often than not there is some adjustment to the overnite inventory - which is all long - at the Open. I would wait for the market to set up before entering a trade.

Thursday, June 28, 2012

For Friday June 29, 2012

 

We remain within a six-month balance as June draws to a close; as of yet there has been only been some liquidation; no meaningful long-term funds have been scared out of their positions. This should be monitored closely as it can change very rapidly.



There is a 5-day balance. The balance area extends from 1302.5 to 1331.75 and lies within a larger balance area that extends from 1299 at the low to 1357 at the high. Coming into Thursday morning the overnite inventory was short. The Pit session saw the inventory get further short. Thursday's auction closed with late day Spike - most likely a result of short covering. The Trading question for Friday is will there be upside follow thru. Spike rules apply - do we open in or out of balance relative to the Spike. Failure to find acceptance above 1332 immediately draws our focus back to the 1300 level. 

As we go into the end of the second quarter and into the Fourth of July holiday, the markets are going to get thinner. I suspect  trading volume is likely to pick back up starting Thursday next week.

S&P Morning Update for June 28, 2012



Overnite Inventory is Short. There was no follow thru to the upside in the overnite session as the market awaits further news EU Summit. In fact we have taken out Wed's low in the overnite session. GDP and Jobless Claims number were in line with expectations and so far the market reaction is muted. If we opened now, we would be trading back at y'day low and top of 2 day balance. Finding acceptance back into the prior 2 day balance takes us back to the 1300 level. Key is where we open relative to y'days range - in or out of balance. I would wait for the market to set up before entering a trade this morning.