Buy Dips, Sell Rallies…
A very slow-moving trade in the SPZ this morning as dealers were buyers on the open, sellers after 45 minutes of trading and buyers off the the session lows of 1442.20.
The lack of volatility continues to puzzle market participants, as we keep waiting for some type of spark to move this market one way or the other.
For the remainder of today, there is no reason to expect anything other than sharp short-covering rallies followed by breaks that typically retrace the entire move. For a trader, it does not pay to sell breaks or buy rallies for a continuing momentum trade. Why? because the momentum is not carrying through.
One other note, on a 30-day historical volatility basis, we have now reached the lowest levels of vol since the fall of 1996. The implication is that the market is ripe for a major move. The smart trader will wait until the market tips its hand.