Snap Back

by Larry Levin

Today was another interesting day. Unlike yesterday, there was not another low volume sell-off, but rather much higher volatility. What was odd about it was that the market continually reversed from the open to the close. Moreover, the reversals were sharp 6.00 to 9.00 point swings that gave few if any opportunities to enter the move. As I was told, the virtual trading room missed four trades Tuesday by just one tick each that would have, were they filled, been worth quite a few additional points for the day.

What was also interesting is the fact this increase in volatility is occurring as the market gets closer to rollover, which begins after Wednesday's close when September will be the front month. Normally the market becomes rather lethargic as volume becomes bifurcated among the June and September contracts. Surely this will begin soon, most likely Wednesday through next Tuesday.

What wasn't "odd" or "interesting" to us, however, was the support and then reversal from the 1040.00 area. Yes, the low was actually 1041.20 but one cannot shoot for to-the-tick numbers unless they are willing to miss 99% of the day's opportunities. In a recent "Notes From The Pit" we said: "The market is still bearish but slowing, which could lead to lower prices again but support as well. I wouldn’t be surprised to see a “b” profile soon." In fact, we have noted that the downside has been slowing for a few days, evidenced by overlapping to lower value areas...but narrower. Because the value area continued to be put in lower by all market participants - it was bearish. However, as this perceived area of value became narrower each day, less and less traders were wild about shorting the market as it fell. Said another way: the drop was losing momentum. Support on the charts had a close level pegged at 1040.00 and although we did not get a "b" market profile formation today, there was support any way.

In other news, European central bankers have been using public money to support the Euro currency in a futile attempt to keep it from falling. It is inevitable to continue falling, given their financial situation, but that won't stop the central bankers from wasting the money of their people. It never works - just ask Japan.



Previous Day's Trading Room Results:

Trade Date: 6/8/10

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


1) VA buy @ 11:03am at 1054.25 = +.25 (1 lot)

2) Algorithm positions (22)

3) “Reading the Tape” positions (4) combined Secret’s, Algo, & “Reading the Tape” total… +4.00


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