Three down days boosted odds of a pop; some magic numbers and an invaluable trading tool
Today started with another round of weather-induced light attendance; however, the volume was well above the anemic pre-holiday volume. Also, there continues to be chatter of the January effect being thrown off by the weather conditions as the first 3 days of 2014 saw profit-taking from the 2013 record run. The question remains whether this leads a more sizeable decline in the near future.
1818 IS A BIG FIB LEVEL GIVEN LAST FRIDAY by william_blount. fwiw – a good friend of Bill’s bought Jan 184 [SPX] calls friday. sold 3/4 into the 31.5. bought em back again in scale yesterday. with bulk being done under 20 march. sold 3/4 32′s this morning. based on the ewave and the breadth picture I mentioned last Friday. no need to burn time waiting on the this Friday’s pending NFP – am long longer dated equity calls mostly value and chinese speculative junk out to Feb. in short if people dont get how to trade the commentary properly, it is surprising to me. me: GOOD WORK MAN.
stephen_cohen (05:16) food for thought-the S&P has not closed lower for first 4 consecutive sessions since 1978. There have only been 7 occasions that the S&P has been down the first 3 days since 1928 … the S&P has been down 3 in a row or down 4 out of the last 5 love buying things on sale! PITBULL: they need to get em plus for the first 5 days of january to continue the party. OK, tomorrow is the 5th trading day of the year and all those ‘yae jeff hirsch, trader’s almanac type stats’ about the 5 day effect are normally based on CLOSES NOT EXTREMES — so the magic # is 1841.1.1 and you may want to look at the [DJIA] close for the 31st too – because most of the stuff is on mom and pop index, ie the DOW – william_blount. Also, January decline – perspective: We had a big (30%+) rally in 1995 … look what happened in 1996 – January slight decline before ending the year up 20%+. Same thing in 1997 -> another 30%+ rally in 1997, followed by some mean reversion in Jan 98 … before ending the year up 25%+.
The S&P gapped 7.5 handles higher on the opening bell and barely looked back after printing an intraday low of 1836.50 and grinding higher to an intraday high of 1834.50 before retracing to and holding the opening range on the midday retest. The equities quietly bounced sideways to modestly higher after holding the opening range – lending support to the ensuing rally which fell short of the 1834.50 morning intraday high.
william_blount (08:41) bulls ain’t done crap til they take out the weekly pivot, 1831.70 and don’t get the lean shifting until 1835 is converted to support / resident bears will say we had our worst start since 2008 – i aint one. rose (09:18) financials are really struggling, but they have been counter trend to start the year (have been VERY strong). Nothing but bullish articles on [C] overnight, was up 1.5% and now barely up 60bps (and [BAC], [JPM], [MS] all down on day). Chatter – multiple upward revisions of GDP recently, including Credit Suisse 2.3 up to 3.0 and [GS] 2.3 up to 2.8. Some concern when this support runs through the indices – what’s next?
Following yesterday’s $1 Bil buyside imbalance, today at 2:20 the MrTopStep imbalance Meter, MiM, was showing 65%, $293M, to the buyside with the futures trading in the 1832 area. iceChat (14:49) MOC Buy $480mil with 1833 area trading. The S&P futures were trading 1831.70, up 11 handles, on the 3:00 cash close.
Suggested readings: I think a majority of traders are lazy when it comes to this…and that majority loses money. Having discipline utilizing this tool will carry over “on the field” – posted by Chance http://bit.ly/1gefgQK **NOTE: Carina ah, Chance I love Steenbarger spoke to him over the phone before when first learning to trade and he was so nice. william_blount his blog and twitter 4 years or so ago is still; stored in the internet and is treasure trove for the EMOTIONAL SIDE OF TRADING — right up there with Van Harps early work. Albie I love BS, another excellent guy is Andrew Menaker.
Coming events: http://www.investing.com/economic-calendar/