Jan 252012

I’ve avoid speculating about what the market may do because I don’t really find it useful.  But the past week has been very suspicious.  My trading was great the first two weeks and since then it’s been not very good.  I’d be slightly negative the past week and a half had it not been for some overconfidence on my part to let some small losers turn into bigger ones.   When we broke out of the multi-day balance to the upside, I was sure buyers would support it on a pullback.  But no.  Then we broke out to the downside and I was sure sellers would keep it from going back up into balance.  But no.  Those should have been smaller losses but I thought they were great opportunities and went with larger size and larger stops and.. well.. larger losses!

But that’s not what this post is supposed to be about.  In my opinion the market is not behaving normally.  I see that many other traders are not doing well.  But profits & losses aside, it’s just frustrating.

So I start wondering.  What if some traders know something we don’t.  What if they drove price up in order to unload?  What will happen if some bad news comes out?  There is so much volume up here that if bad news does come out, we could get a very powerful move back down.  And if the bad news doesn’t pan out, we could get a very powerful move up.

I read yesterday that the COT report showed the largest net short position on the Euro in a long time.  And then the Euro rallied.  That could have played a role in ES moving up.  But those Euro shorts could be hedging against a real disaster and if that disaster comes the hedgers will be protected and the speculators will have huge losses.

News is coming out about Greece and it’s not good.  Now Merkel is not so enthusiastic.   Soros expects Greece to exit the Euro.  I think it’s about to hit the fan.  And with ES extended so far up I think it’s not going to be pretty.

Now I’m not swing trading so really that was all just curiosity on my part, so what does it mean for day trading?  All I know there is my trading isn’t working the past few weeks, partly because the setups haven’t panned out and partly because I’ve made mistakes.  So I’m cutting back and being very careful, even just watching.  I think the best bet here is to wait until ES makes its move and then go with it.  As we got faked out twice we have to be patient and wait for the real move.  Which should be obvious.

So if you’re not doing well lately don’t fret it.  Just relax a bit, the markets will be there next week.  If my kids weren’t in school we’d take a vacation right now, but that’s not possible.  So maybe a mental vacation.



  2 Responses to “Something big coming?”

  1. It does seem that the recent moves by the ECB has acted as quantitative easing and devalued the Euro. The question does seem to remain, how much more will be needed? Continuing to keep Greece’s default from triggering CDS’s appears to be a struggle. It might be better for the market if Greece does leave the Euro, then devalues the drachma to get themselves out of their debt. Whether Greece stays and experienced painful austerity or goes and experiences painful devaluation, it will be bad for the Greek people, but with Greece out of the picture, everyone can then focus on the bigger problems of Portugal and/or Italy.

  2. Well this was a timely post. Unfortunately it happened while I was gone. Should be some good trading opportunities in the next few days.

    Jeff – I’m still not writing off bad Greek news in the pipe. but for now, yes everything does seem to be going well when one takes an extremely short-term view.

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