Sellers Lead the Charge
Traders returned from the holiday weekend looking for some action, and found some early with help of dealer selling on the way to 1508.
However, before all the bearish bells are rung, it is worth noting that directional activity has been somewhat non-existent as the spread trading between the SPU-SPZ is taking center stage. This type of trading, which will continue throughout the week leads to choppy moves, followed by sharp rallies or breaks of 300-600 points. In general, the best type of trading during the week will stem from traders taking a direction and holding on for their targets. While this seems simple enough, this week most likely will not provide us with the type of follow needed for less time consuming trades. In other words, if you are a day trader and your average holding length is 30 minutes. I would expect your trad time will need to be adjusted upward to have success.
Finally, if we get below the 1510-1508 support on a hourly close, look for 1500-1498. Any settle below 1500 is bearish and has negative implications for the market. Accordingly, I have been selling rallies, and looking for this scenario. I am wrong on any trade above 1516.50.
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