ES and the Great POMO Rally

January 21st, 2011, 12:03 AM

aquarian1

Potential signs of a top may be forming for the ES.
Breaking 1271 on a close puts the uptrend in danger of being broken.
Closing below 1259 paves the way for a retracement to at least the 1198 level.

Private Banker

I guess I look at charts differently but a break of 1271 IMO, appears to be nothing more than a pullback. That's barely below the 10 day MA which is a major average CTA's observe. A close below the 30 day MA would get me a little more excited. But don't get me wrong, this market (equities) is as real as Santa Claus. I've scaled out of most of my long positions in anticipation for a reversal... Just waiting for the market to tell us when. Who knows, maybe we get another flash crash... Maybe no tail this time... Stay at the lows in a limit down...

Closes 1275.75 is not yet less than 1275 and I wrote "puts the uptrend in danger of being broken."not that was broken.
We need a close below 1258 (I'm changing it from1259) to confirm a break. Until a break is confirmed it is a pullback

all the best !

January 22nd, 2011, 12:52 PM

Well, we've had 2 consecutive days of selling with Friday being somewhat mixed with it opening higher and then selling off to about the 61.8% level from the globex low.

The market has a lot of areas of support to get through to really change this trend with the most significant being the 1234 - 1237 area which is the 50 day MA and a 50% retracement zone from the Nov/Dec area. Volume is definitely increasing with the selling that has taken place. This could be traders covering their positions now that we've reached areas where a lot of people have made most of their money back from the sell off in '08. Or maybe this is real and people are finally realizing this rally is nothing more than POMO's influence but it's tough to fight the Fed. The real sell off is hidden to the average investor. It's taking place in the USD. This is looking really bad.

January 26th, 2011, 03:21 PM

The Fed released it's FOMC minutes today with not one dissent. What really blew me away in the minutes is their dismissal of commodity prices. They are under the impression that long term inflation will be rather stable or subdued. Additionally, they plan to continue to buy (monetize) $600 billion of longer term treasuries by the second quarter of this year. What they really mean is they simply cannot stop monetizing debt because they are stuck in a box...

In more important news, the ES made a new high today (1296.75 as I write) and will no doubt keep on chugging along the 10 day MA.

January 27th, 2011, 03:52 PM

First pic is unmerged chart of the NAZ..
Second is merged with overlapping value areas, making the picture cleaner....

You can see rejection near the lows, and volume accepting higher prices. We're taking the highs out as I type this, so set your targets to take out the stops above the last swing highs... Newbies like to use stops right above a previous swing, nice place to take profits...

I want to note.. Im not a hardcore market profile guy. I just use it as a visual aid as to where volume is taking place.
Thats it.

January 28th, 2011, 12:31 PM

Wow! What a morning! From what I see, this last little run up appears to be a pump and dump. Market appeared to have topped out 1/18-1/19, sold off to the 21 day MA got support, got goosed back up and there is some serious profit taking today. If I recall correctly, the flash crash occurred on a day when Greece was rioting. Today, we have rioting in Northern Africa. 1286 is half way back for the day which is also where the VWAP is sitting, I wonder if we'll get there...

The NQ appears to be the hardest hit so far today down nearly 2.5% at one point. It'll be interesting to see how the day ends. Meanwhile, Oil has ripped out higher. One of the biggest up moves in a while. Probably attributed to the rioting in Northern Africa as well. Either way, it was an extremely profitable day for intra-day trading.

Cheers,
PB

January 31st, 2011, 02:32 PM

ES appears to be responding to a 50% retracement from the 1299.50 level. I would like to see how price responds at the 50 Day MA for confirmation of a true trend change. Meanwhile, commodities are tearing through the roof.

February 1st, 2011, 10:45 AM

Well, it looks as though there is no change for now. In fact, there is an extension long that was bought up at around 1262 and is ripping higher via the Fed. Meanwhile, the USD has getting back down to the previous lows. The gaming continues...

February 2nd, 2011, 03:53 PM

This will be the last update for a while until something significant happens. I just wanted to point out what is occurring in the credit markets as equities continue it's dog and pony show.

I feel the credit markets are reflecting something severe. The current yield curve suggests that this isn't the typical economic recovery where investors are moving out of safety to risk assets and feel that something big is being priced in as rates continue to climb. It appears that once again, Bernanke has got it wrong. He didn't see the credit crisis, housing collapse or recession. Why would anyone believe that his continuous QE will work?

Cheers,
PB

February 3rd, 2011, 05:03 PM

Private Banker

Volume is definitely increasing with the selling that has taken place. This could be traders covering their positions now that we've reached areas where a lot of people have made most of their money back from the sell off in '08. Or maybe this is real and people are finally realizing this rally is nothing more than POMO's influence but it's tough to fight the Fed.

We have NFP tomorrow morning and the ES has banged its head up against 1305.50/1306 for three days now. I have seen this pattern before and what happened last time was the ES blew thru the resistance level as soon as the NFP data was released, ran all the stops and then made its real move once the cash mkt opened an hour later. Lets see what happens tomorrow...

February 3rd, 2011, 06:26 PM

Tartimo

We have NFP tomorrow morning and the ES has banged its head up against 1305.50/1306 for three days now. I have seen this pattern before and what happened last time was the ES blew thru the resistance level as soon as the NFP data was released, ran all the stops and then made its real move once the cash mkt opened an hour later. Lets see what happens tomorrow...

Based on what is occurring with the continuous POMO/QE and the threat of another round of QE after the current, I wouldn't doubt for a second the ES zombie will continue to march up along the 10 day MA blasting through 1305.50 - 60. It hit the 10 day this morning and immediately got support and bounced. I've traded the ES for a long time and am truly amazed at what is happening. But in any event, one must continue to follow the trend, at least from a swing trade perspective.

The problem with QE is there are some unforeseen side effects on Bernanke's part. Inflation in food and energy, depreciating USD and mid/long term rates climbing higher. The best part is Bernanke doesn't get it because it doesn't fit into his model. Lol!

Cheers,
PB

ES and the Great POMO Rally

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ES and the Great POMO Rally