Wednesday, February 29, 2012

Bonds down Dollar down Equities Clown Down - SPX

15 min ES. Notice light blue dashed line. held. WICK though. 
 Two things happend today which should stand out in your mind.

1. Bonds broke down with equities

2. S&P & NDX took out previous day lows

@ US Dollar futures reared their ugly head instantly sending the commodity complex sharply lower. Gold and silver saw the greatest sustained selling pressure, gold was off 100 points from opening prices at it's worst level..eventually basing around 1690 (i like it long over 1700 into tomorrow)... Silver also fell considerably. I am in the camp silver finds a bid into thursday as well

NQ highlight of chart price action
Equity index's also gave a clear sell signals shortly after dollar began rising, what i noticed was a simple chart breakdown and some funky quotes. The violence at which NDX reversed after failing to make a new high over 2645.25 was my first signal. The second signal was the break of 2635. By this point, apple HPQ (weak all day) and AMZN were already nearing lows; thus i lift the the offer on the 1 strike OTM NDX put. 

The hedge worked as the NDX fell below 2625.  I alerted on twitter numerous times, as well as in the live forum i moderate; i am adding

I added calls in both SPX and NDX in the final minutes of the extended cash session after paper pushed the ES down 10 handles on the close. The calls are weekly and premium risk is minimal. 

105.50 level eventually finding a bid @ 104.84. This level eventually became the head of an inverse H&S. shoulders being 105.75.. the price lifted out of the right shoulder into 106's forming a consolidation pattern before the a squeeze into floor close sent prices over 107.10.  

5 min zoomed ES.. notice reaction to
light blue line b4 Afternoon sell off
What i have found with CL, especially on days where volatility is high in the morning; crude will rally into pit close as traders cover their positions. This works on the opposite side as well, crude up strong into the morning hours, pit close could see profit taking.