Ok, so once again, this price action looks kind of iffy. A week ago, on Sep 24th, the Dec Dow contract had a high print of 9866, 140 pts away from the 10000 level..The SPZ had a high at 1075… today the Dec Dow printed a low of 9336 and the SPZ printed 1011, lol… over 60 handles in the SPZ and over 500 pts in the Dow..
Granted, this has been after a 6 month rally, but this price action shows how the markets go down 3 times as fast as when they go up.. This rule seems to hold true for all markets in general, be it lean hogs, Malaysian palm oil, or as we have seen, an overbought real estate market.
Just food for thought, but the fact that the indexes were sharply lower yesterday, for instance the Dow was down close to 200, makes one wonder how ‘safe’ the information is that’s being dispensed by the department of labor.. I someone knew that the jobs data was going to show 265K lost rather than 200K lost, which is what was expected, that person would be pretty much guaranteed of at least a 100pt down move when that number was released.
100pts on a two lot Dow mini is a thousand bucks… a hundred lot would have resulted in a 50K profit, again, almost risk free if you had the information before every one else…Maybe I am just cynical, but I have seen this on more than one occasion, and it just makes a person wonder.
In any event, lets look now at the grains.
Nov beans remains stuck in its range between 907 and 931… today we have seen a low of 906, as of right this minute… perhaps we will go down and see what sort of sell stops are on the other side of 9.00 even… that could set off a flush down to the 884 level, at which point I think the market will snap back like a rubber band, on profit taking from earlier shorts, and a mini short covering rally fueled by other traders who jumped on the selling band wagon too late, and then chased their losses on the bounce, thus exacerbating the severity of the rally..
It will be short lived, but it will be fueled by weak shorts covering bad sell positions…. The old adage’ ‘selling it in the hole’ only to watch it rally back in your face, much similar to action on the revers, where short covering traders will be responsible for the high tic of the move, as they ‘puke’ their bad positions…
There are times when a trader just wants out, will pay up to stop the pain… As a pit trader, I very often bought the new highs and sold the new bottoms..
The key was to realize it quickly and bail, and not just throw one’s hands up in disgust. On another note, when the pits were active, there were specific traders (myself included) who were good fades at those levels… If a certain local trader was putting out the high print, it was a safe bet to fade him or her for at least a 2or 3 cent scalping opportunity.
Due to screen trading, it is more difficult to sense those blow off tops and exhaustion bottoms, unless you are a skilled tape reader.
C