Tuesday, June 8, 2010

Market trying to hold support levels

The market has been holding tuff today and trying to keep support at the 104-105 area on the SPY's which corresponds to the 1040-1050 level on the /ES. I am trying to keep an open mind but I am still not convinced that this is the end of the down move. I got flat today and booked some nice profits and will wait to see what happens tomorrow. I just feel a sizable up day coming. But right now that just means another opportunity to get short.

Above is an interesting chart that I have put together. I added a horizontal view of volume by price. I think this can help view where support and resistance is in conjunction to where the most volume has been done. I also have added the cone of probability of expiring with in certain price ranges with a 68% confidence interval. I mostly only care about the front month targets. Then below I added the average 50 day volume to see when volume is above average. As you can see this entire down move has been with heavy volume behind it, which is why I think we have moved down as fast as we have.

For now I remain bearish and am open to the market telling me otherwise. But there is a lot of technical and fundamental damage that the market has to work through.

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