Searching For A Bounce
A gentle grind lower has spilled into thoughts of trouble ahead in the SPZ market. After a flat open, sellers began to exert influence over the trade. A couple of major dealers stood out in their aggressive selling in the contract. This typically is a sign of hedge fund activity.
However, before we sound the bearish horn, remember that we have fallen nearly 7% high-to-low this month. At some point we will have a more sustained bounce to the upside. This makes trading somewhat difficult because the day is filled with stops and starts to both the upsdide and downside. In other words, today is not a day to buy breakouts or sell breakdowns. Rather, it seems more prudent to be a seller of rallies between 400-650 points off their recent lows. The market will prove you wrong if it continues and trades 850 points above a recent low.
As for the remainder of today, I would not be surprised if we stage a final-hour rally that would take us back towards the 1475 level.