When To Short
They did it again. Similar to S&Ps pit trader behavior explained in
last night’s Futures
Market Recap, “locals” sold at new highs/session highs this
morning, which were struck on a gap-up opening in the S&P futures
(
SPU1 |
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PowerRating). The result was an 11-handle cascade in the first hour that spilled down
to fill the morning gap.
Notice that this morning’s pop-up opening was one handle
above the previous, July 19, high at 1231.40, meaning that a move below this
figure triggered a same-day Turtle Soup sell reversal signal. (In Connors and
Rashke’s
Street Smarts, available at TradersGalleria,
this setup triggers in the same day, rather than on the following day as the
Turtle Soup Plus One setups do. TS+1 setups are scanned for
and presented on the Futures Indicators page. Of course, the SPU1 sets up tomorrow
as a Turtle Soup Plus One Sell signal for tomorrow).
Another way to have put the early pop-and-dump,
selloff puzzle together
is to have looked at the Market
Bias Indicators Page
and noticed that their were four down signals, a collective sign providing a
larger-than-normal chance that the market could selloff today and/or
tomorrow. Dave Landry pointed these out in his Stocks and Futures Outlook
commentaries last night as well. Although the market jumped up strongly on the
open, a strong downward bias from the Market
Bias Indicators Page
could have given you another reason to short on the high, as the signals
were even more stretched on the day’s gap open, and thereby more primed for
a snap back and move lower.
The spooz then traded somewhat “geometrically,” retracing 50%
of the morning tumble before leaving a topping “tail” bar (on the
five-minutes) and then tumbling another 8 handles into Wednesday’s closing
range. Again, the market corrected 50% of the afternoon decline to finish up
4.80 at 1226.00.
Debt futures also closed lower on the declining weekly jobless claims figures.
Even though this is a short-term seasonally effected economic statistic,
fewer unemployed could cut the odds of the Fed remaining on the aggressive
in easing monetary policy. Hence, with the odds now slightly higher for
slightly higher interest rates, debt futures closed down, their price moving
inversely to
their yield. September T-bonds
(
USU1 |
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PowerRating) closed near the lower end
of support, down 20/32 at 103 5/32, indicated in
Levels From The Bond Pit. 10-year notes
(
TYU1 |
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PowerRating) blew through
their first support from the levels page but have found support at the
second level, in the 104 14/32-16-32 area. Notice on the five-minute charts the double bottom bar that resulted in a 1/4-point rebound. Both
contracts are now challenging their lows again.
In the currencies, Momentum-5
List markets euro FX futures
(
ECU1 |
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PowerRating) and
Swiss francs
(
SFU1 |
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PowerRating) continue to show momentum after lapping down
overnight. Being momentum markets makes them eligible for an Off The Blocks
entries which triggered within the last half-hour. In a lap-down situation, an
Off The Blocks long entry does not trigger until a momentum market trades
above the high of the prior day’s last hour.
A mitigating factor in these currencies is that both markets closed near Turtle Soup
Plus One Sell inflections now. In addition, they have already
seen good gains off their lows. The strength of recent momentum here — and
their cup-and-handle-like formations — suggests their Turtle
Soup Plus One Sell signals will not play out
significantly tomorrow and they will travel to new multi-month highs. Both
contracts also closed in Kevin Haggerty Slim Jim-like formations, near their
session highs.
Going the other way,
Implosion-5 List market October sugar
(
SBV1 |
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Chart |
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PowerRating) also
triggered an Off The Blocks (short) after a gap up and trade below yesterday’s last hour close. Sugar
closed down .26 at 7.65 on the session and was down approximately the same amount out of its
Off The Blocks
short trigger.