Yesterday I showed evidence of professionals buying the lows. I woke up with a nice surprise: ES gapped up big time, taking out my 84 target and stopping at Tuesday’s high at 90.00. I weighed my options and I felt the risk of 90 holding during globex was too high to risk giving back some of this profit. I do think we’ll fill the gap but there could be a pullback first. So I took profit on the last portion at 89.75 for a gain of 15 pts on the last portion.
If we pull back and I see some buying I will consider going long again.
On Twitter someone was asking what was going on in Europe to cause the gap up. I replied that the move up was totally predictable, but the magnitude of the gap up was a surprise. I believe the smart guys often move the markets overnight so that everyone will chase it. This is also a method to clear resistance by taking advantage of low liquidity in the overnight session. So while I was surprised that the gap up was 12.50 pts (as of the time I’m writing this), I’m not surprised there was a gap. And I don’t pay attention to news. If anything, I’m looking to fade it.
I have found that the market moves quite a lot overnight. There is money to be made if one can guess correctly. The more I focus on listening to what the market is telling me, the better I become at forming hypotheses and profiting when correct.