Today is Monday June 1st and the markets had a big day, completing the call made 5 weeks ago.
There must have been news out to move the markets in a sustained push to the top of the range. The market jumped on the open to catch up with the future market which had extended its move from Friday’s late push up.
Since the open of pre-market on Sunday afternoon, other than an initial dip, it’s been up and away since then. The Dow closed up 221 points and the S&P plus 23 points. Usually there is a 10 to 1 ratio from Dow to S&P points.
Well, this move does not surprise me in the least. We were pushing up over every significant pivot point with the last one at around 880 and holding. With today’s action up, that takes us right to the upside target I had called for at 940 five weeks ago. Initially, we came up a little shy on the previous rally, (930) , but with today’s finish, I would call the target of 940 on the S&P complete.
Where do we go from here? There is resistance just above this number and we will have to see how the market handles its recent gains. If it can consolidate at these levels, that would be good. But it is going to take a lot of buying power to get it over this level. Sideways to slightly down would be normal price action from here, but take it as it comes and trade accordingly.
In today’s action, I traded very small initially on the open. I missed a couple of nice moves in the direction of the predominant trend but other opportunities presented themselves soon enough. I did have a slight bias short, which I really don’t like, but as the day moved on there were trades in both directions.
I do prefer to see trades in both directions when I am scalping for small targets, but when you get strong directional moves like today, it can pay to wait. That was another reason I traded small. I knew there was going to be a gap opening and prices can tend to be erratic until the futures and cash markets come back together. It was in that rejoining that a nice continuation pattern developed about 5 minutes after the open and turned out to be a real nice move.
I wanted to trade for small targets today, after last week going for bigger point gainers, which did work out that well when all was said and done for the week.
After the grind higher in today’s action, I saw what looked like the top of the move and at 11:06 a.m. went short, as it bounced around above and below my entry for just a moment, until it fell for a 6 and 7 point gainer right to bottom where I covered. That was nice to be able to see the pattern and formation developing.
Earlier there was a rising wedge that developed, but it only had a small retracement to it. The upside resistance area continued to keep a hold on the move up, while the bottoms moved up more quickly, forming an even larger rising wedge, I saw it coming together and waited for it to come to me. That is how I like to play the bigger moves. Tomorrow I will look to start out with the small targets contract size until we see what the market is saying. I will show some of my trades taken in tomorrow’s session.
Since I started trading on the open earlier in the day, I had noticed that I was not as sharp as I was when starting later in the session. It has been an adjustment for me getting up earlier, still not sure I am there yet. Getting up at 5:30 am has not been easy, I am trying to get my mind clicking on all its cylinders before the open. Trading with smaller contract size can take the pressure off, because with only a small downside daily loss stop, you can run into it quickly.
It should work out fine over the next couple of weeks. Another issue was trying to run two screens on one computer while I had so many other applications running. Last week there were missed opportunities for me, but others in my group were able to capture their points without much problem.
That is all for now, we will see what tomorrow brings and go from there.
http://www.screencast.com/t/A3sYdPZj Today’ equity chart
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Tags: resistance area, retracement, Rising Wedge
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