There was another strong rally Thursday, the third one this week after probing the lows for the year just two sessions ago. No doubt the bull horns are sharp when backed into a corner or even teased.
From an hour before the close Tuesday until today’s finish the SPX has moved an amazing 90 points. Should we have expected anything different with a VIX in the 40’s? Let’s flash all the way back to Tuesday of this week.
It appeared the market would drop to new lows for the year and indeed it did – but it didn’t finish there. Ok, a 40 handle move on SPX in 40 minutes – we’ve had these brisk HFT-driven frenzies a few times since July.
Bank of England is providing more liquidity, the ECB didn’t cut rates but they seemed to have something new to unveil. There was a strong bid under the market all day as the Fed commenced with selling and then buying securities today (their operation twist, or what I call operation karate chop).
Yesterday was good followthrough on lighter volume and then today’s sharp spike, again on lower turnover. This puts the average back to the level of last Thursday. Having made a lower low and the character V-shaped bottom.
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Unless you’re willing to guess or play the extremes during the day this is a very difficult market to play for swing traders. Unless I am comfortable staying with a trade for more than one day then it becomes ‘lucky’ if you get it right. Is that how we should play this market?
Looking around charts tonight most of what I see are V bottoms. LVS, BRCM, CRM, IBM just to name a few. Even the banks show it as well. It’s as if the rocket fuel came for the shorts with their hair on fire.
Some of the recent twitter trade ideas had mixed results – some good and some fell flat. I’ve been playing it rather guarded as you can imagine.
I need to see some rhythm in this market without being flipped and shaken out by the hyperspeed of each day. It really seems this market is bent on breaking every last participant unless you are swift and move your feet.
Current trades still open -Older trades Dec WYNN call spread (150/160), WLT iron condor and short AAPL iron condor (via twitter). We’ll have some new trade ideas soon as there are a few decent setups, but I expect some backing and filling here in the interim.
If we are embarking on a new bull rally we will not miss it. If this is a fake out, we will hit it hard on the downside, too.
The jobs report will be a market-moving event. At this point any number will be relevant. I’m not going to guess here but we’ll see how the market reacts and move accordingly.
Make sure you are following me on twitter! See you on the stream tomorrow.
Bob
