At the close of trading last Friday it seemed as though you couldn’t even give away S&P contracts fast enough which capped a week of long liquidation along side shorts pressing. At the start of this week there hasn’t been a real seller in the house, so price has rotated right back up to “key resistance” residing at 1100’s. Is the Market “bi-polar” or is it just an “over-crowded trade”. We suspect a bit of both with an Average True Range at 21. But hey, who’s complaining? Isn’t this exactly what intra-day traders clamor for?…Volatility!…All Day Baby…All Day.

Is this just a correction or the beginning of something deeper and sinister? It’s either the best buying opportunity or best selling opportunity…The answer will certainly be revealed in due time.
In the meantime, as intra-day traders, we will continue to read the market generated data objectively, remain flexible and open-minded in our decision making.

The S&P e-mini March contract has only been able to generate one, yes one positive delta day in the past nine sessions. The past two sessions alone where price has actually rallied off lows have netted consecutive negative delta readings…Certainly not the response that bull market moves are made of…But we won’t read too much into it at this point, though we are cautious on the long side and continue to favor lower prices in the near future.

Below is S&P e-mini Profile Graphic with some key price levels for Thursday’s Session. Price was able to close in the upper three day quartile, so that gives the bulls a slight advantage. They still need to prove that they can get price above the 1100.00 level and keep the auction alive. Above the 2-day highs and price has a decent chance to revisit the 1107 handle, which is the January Midpoint. Below the 1091’s and price could rotate back down to the mid to lower 80’s. So either way our game plan is to remain flexible and open to directional cues from Big Money.

Good Trading