"M.O.B."

by Larry Levin

There was only one report today that didn't really get the market moving much - the non-manufacturing ISM data. It was kind of a mixed bag of news. On the surface the news seemed good: the data was better than expected. However, the data point is still showing that this part of the economy is contract, just at a slower pace. In fact, today's news makes the ninth consecutive month of declines so it really was a mixed bag.

This led to a bit of a mixed market today as well; however, there was a strong close. It was such a burly late move that a full 60% of the entire day's range came within the final 35-minutes. One wonders whether this was just short cover from a weak open and so much selling in the overnight market. We call this type of late move a buying spike and how the market reacts to it in the morning should provide the answer.

On a larger scale we believe the market may have reached a Make or Break area (M.O.B), which is how we often refer to a critical level in our trading room. The markets have been trading sideways to lower for a full month now and the S&P500 has reached the first support level of 884.00. The next level, which is even more critical, is 873.00 and a close below that level could lead to a swift drop lower. Oddly enough, Wall Street is now second guessing their "green shoots" mantra and wondering if recovery will come in 2010...or later.

On the other hand, since this is a MOB level it could "make" it. Said another way, this is a time where one may buy the S&P with a low amount of risk - but risk nonetheless.



Previous Day's Trading Room Results:

Trade Date: 7/6/09

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

1) TP buy @ 1:35pm at 889.50 = b/e (1 lot)

2) Algorithm positions (8)

3) "Reading the Tape" positions (1) ...combined Secret's, Algo, & "Reading the Tape" total...-4.25


Electronic (YM) Mini-Dow:

1) None today



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