Anyway, I have learned in this market not to fight the powers. Rather, let the powers trip themselves up. 9600 on the DOW and 940 on the S&P are right in front of us, yet despite the dollar manipulation and spin doctoring of news - we can't seem to make the grab! That is not to say it won't happen tomorrow or the next day. But think about it, if we were in full rally mode, the 1039 high should have been taken out today.
A rally needs cooperation between manipulators, speculators, and value players. The manipulators bait the speculators, the speculators bite and carry the price higher, value players fill the price action with volume to solidify support. The cycle can then repeat itself. If either the speculator or the value player fails to participate, the rally can not occur.
Look at the 3 minute chart of the ES mini future contract for today.
I labeled some general phases of a typical pump-dump scam run during the day. I'm not saying that this is what happened today - I'm just suggesting one possible scenario.
Though we opened down sharply, high volume buying stabilized price action and proceeded to trail off during the opening hour. I labeled the divergence between the rising price and the falling volume. This tells you that buyers are buying only enough to keep the price action higher - no more. Further evidence of this is provided by the price swings that appear between 9:30 and 11:00. As soon as the throttle is released, the price drops swiftly. This tells me the manipulators had trouble baiting the speculators in the early session.
Next the manipulators pump the volume and price all the way up to the noon hour, hoping again to bait the retail speculators during the lunch time day-trading session. As you can see, price flattened and volume sagged. Again, indicating that the speculators have no interest. At best, we saw some speculation towards the back half of the second lunch hour taking the "post lunch gamble". That caused a volume and price spike that we see at around 1:30PM - drawing in just enough speculators to execute a payoff move.
At this point, the price is as high as it will get on the day, and the sellers can proceed to dump their shares through rising volume and sharply descending price. The day's setup did indeed payoff in this pump-and-dump scheme. So well, that we see the setup for tomorrow already underway - with a confirmation through a lack of interest and trailing price action in the after hours session.
Lightly traded, highly manipulated, and very dangerous. That is how I characterize this market. Now I have to go and listen more carefully to President Obama to get a clue as to what will happen to the markets tomorrow.
Good luck out there!
3 comments:
Hi David , interesting take on the day. The roll over did line up in time with the Feds Book , but there was little there to move a market , and if the book moved the market the
late day , magic moments would not have happened .
This am I figured the plan was to run oil up to move the oil service stocks hence SPY . Where as the plan has been move the Banks Spy follows .
Then boom there was the juice into
Banking , and we took a shot at break out at 1035 , seemed like a couple times. I figured the pull back was the result of not breaking out.
The oil service fell back b4 Oil did , didnt seem right. But what does these days.
Still confused , still setting on my plays. You said last week that this week could test the resolve of longs and shorts alike.
I feel tested.
Im short at 1028 , was looking for a breakdown to 985
to let go, feeling like 993 looks great in hind site.
This is reminding me bit of the uptrend that started on July 13th.
Good Luck to everyone
Oh and what did you take away from watching President Obama ?
It is basically a roulette wheel, isn't it? No doubt the market is being heavily manipulated. also no doubt the market can only be very roughly predicted. we'll see if we are right soon enough.
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