Brian's Thursday recap: BOJ shock and awe, margin selling, crude tests support

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Collective Intelligence! Say hello to margin selling - some portfolios had to make adjustments in one or more markets due to recent large moves in the markets. At (06:57amCT) Stanton Analytics posted: CRUDE: Hi: 94.65; Low: 94.23 This is an extremely weak correction since the Wednesday drubbing. It speaks to the severity of damage to the charts. We look to sell the rally. The ideal spot to ply that trade is at 95.00 to 95.20. The upside pivot is 95.50, the initial target is a drop to 93.50 to 93.33 depending on the retracement level. A daily settle below 94.00 is considered another bearish development in a series of recent concerns.

At (12:15) Albie posted; Good Call this morning, Henry - Stanton Analytics! $$ Crude: a bunch of support lining up at the 92.58 to 92.50 area... Coming to a market close to you...margin selling Crude: We feel that the 92.50 will hold first pass. It will probably give May a look at the 100 DMA from below. That rests at 93.22.

We are still in the heart of pre-announcements / corporate warnings as next week kicks off the earnings season. So far, the pre-announcements have been negligible.

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Kathy has had some very good calls! Charts posted by Kathy Garber @tbg4321. Harmonic rotations: ES http://screencast.com/t/NEv8lOy6l 6E http://screencast.com/t/7CRtdS5S1w CL http://screencast.com/t/qVxf5fa5yhAx

ES Profile chart shows the chop potential region http://screencast.com/t/pTH0VEfBRssP aka no edge to diddle in the middle, the extremes are better.

During the Globex session 460k ESM and 1.6k SPM traded on Globex, trading range was 1546.00 – 1556.50. Wednesday’s regular trading hours (RTH’s), pit session trading range was 1544.00 – 1566.30 before settling at 1548.50 down 15.9 handles. The one-two punch of jobless claims ramping up 30,000 to 385k vs exp 350k and prior reading of 357k and Draghi’s presser - *Draghi: ECB Cannot Replace Lack Of Capital in Banking System. *Lockhart: Fed Unlikely to Hike Rates Before 2015. Also, reports that 97% of Spanish Social Security Pension Fund In Domestic Bonds - in front of tomorrow’s employment data.


The regular trading hours opened slightly higher at 1550.00-1550.30 - market correlations are breaking down Tony_LaPorta: when correlations break down like this i start giving money back

After the SPM suffered its worst single-day decline since 25th February the [DJIA] helped lead today’s early rally, but the Nasdaq and Russell 2000 continued to lag this week. MTS (09:30:17): chatter SPX cash spread traded / resulted in 10k minis to sell
At (10:44CT) top notch trading posted: moving forward as the s&p and nasdaq continue their different agendas I have one thought why I'm looking for the s&p to finally give it up. "Inside trading range." The nasdaq did trade under its low of 2779.00 from yesterday which took it out of its previous day's range. The s&p, to me, has a better chance of seeing its low of 1544.00 get breached then its high of 1566.30 from yesterday. So with this in mind, I'm short now at 1553.00 in the s&p with a stop at its current high of 1557.50. The 4.5 handle risk now needs a 13.5 handle reward for an overall return taking this future to the 1539.50 price. I will look to cover this short at a trend line of 1541.20 and the long that 1539.50 as the day moves on. TA DA!! top notch trading follow up at (11:23) red flag shows up as the s&p refuses a move under its settle price of 1548.50 with a low of 1548.60. Will now stop out with a break even stop at 1553.00. However, will add to the short at 1548.00 offer.
After a small bounce the SPM sold off down to new daily lows at 1546.80. After the low the SPM went into a low-volume grind higher. Most of the day’s volume was overnight and during the selloff but after 1:30 things slowed considerably. The SPM traded all the way back up to the 1555.50 area.
The 2:45 closing imbalance showed the broader market with $530M to the buy side. The 3:00 cash close traded in the 1554.55 area before settling at 1554.50, up 6 handles on the 3:15 futures close.

Wednesday (15:08CT) Roger S posted: Based on today's 1% move in SPX, the VIX should be higher, closer to 16, especially if we're to continue selling off like this. We'll see tomorrow (and Friday).

Brian Shepard is a 20-year exchange member of the CME Group.
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