Thin Trade

by Larry Levin

Today was odd; although the market rallied to the close, volume in the S&P pit it was similar to a holiday: VERY thin. In fact, it was so thin (how thin was it!?) that our new feature in the virtual trading room (VTR) called attention to it many times. The new feature is audio straight from the pit so the VTR traders can get a feel for the institutional action on the floor. Today, however, there was little of it and Paul (the auctioneer) mentioned it multiple times. The market was shockingly quiet, yet it kept trading higher, which confused more than a few of us today.

Yesterday I said "In the end, today was a 'balancing' day, which is normal after large breaks or rallies. After all, the market often needs time to contemplate if such a move was rational, or not enough. Tomorrow could be interesting." It was interesting alright, for the reasons mentioned above. However, following "balancing" days we expect large moves with good action/volume. Since it wasn't quite what we expected we didn't clean house; however, we made money.

Perhaps more importantly, we did NOT misread the lack of action as an opportunity to sell highs. That would have cost us dearly. We clung to our fundamentals: NEVER trade against the trend, which in the VTR we call One Time Framing (OTF).

Notes from the Pit had resistance pegged at 751.00 for today and the high was 750.00, so it may prove to be a decent holding level. However, every day brings us new information and therefore the possibility of unexpected moves. That being said, we believe the market should continue to about 779.00 if today's high is breached.

The next major resistance level for the Dow futures shouldn't come in until 7,450, then 7,660


Previous Day's Trading Room Results:

Trade Date: 3/12/09

E-Mini S&P Trades*
(before fees and commissions):

1) Engf buy @ 9:30am at 727.50 = -.50 (1-lot)

2) Algorithm positions (3)...combined SofT and Algo total...+8.00


Electronic (YM) Mini-Dow:


1) Sell @ 9:30am at 6,992 = +18

2) Sell @ 11:15am at 6,956 = +14

3) Sell @ 1:35pm at 6,893 = +4

4) Buy @ 1:50pm at 6,907 = +25...+$305.00 net



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