WELL NOW WHAT?

After the major component of the PPT showed up yesterday with it's comments, it is clear they have no intention of letting things decline much if at all in equities, or bonds for that matter. We can argue all we want about the merits of what they are doing, but it is what it is. They have essentially publicly stated in not so many words that they are going to make stock prices rise. You could interpret the metals market action is viewing this stance as a confirmation of their doomsday scenario. In really have no idea on that front one way or the other and I don't put money at risk based on arbitrary opinions of things such as this. What I have noticed here is that Copper is lagging Gold and Silver considerably, and has now formed what "could be" a trap on today's breakout.

You can see there is considerable divergence now in the momentum indicators, and we have formed a pretty clear trend line that has contained price quite nicely. It is my view that if we were to take out today's low tomorrow, this could be a very nice shorting opportunity and likely one that I will play. We may just sail up and out of here into blue sky, but if we don't and immediately reverse here, that would be confirmation to me that today was a trap. Clearly of the metals markets this one is the weakest, so any shorting of them should be done here. For those inclined to want to short GOLD, and I know some of my readers have that view, I would not suggest doing it here. That market along with Silver is in a clear blow off move, no telling how far it might go. There is no reason to short either of those two markets.

Below is a trade I was in this week that I just exited today for a nice gain, 10 Year Notes.

You might have gathered by my recent comments, that I was looking to go long in the Interest rate markets. Here is the result of the trade I just did. It appears my exit target which was exceeded by only 1 tick last night may have been a lucky stroke, although if we get equity weakness this market will move higher. For the moment, I am satisfied with my profit here. This is a big move for this market in just 2 1/2 days in the trade. Although it appears I just exited against the prior highs, that was not in the calculation for putting the limit order to exit where I did. However, once I figured the price out and saw it was right against the prior highs I have to admit that made me feel more sure it was the right place to have it.

I also did the TLT along with this in my stock trading accounts, so all in all a good trade.

The tricky part of pairing up ETF trades with futures trades is that often in futures the big moves happen overnight. More often than not I get filled on both entries and exits during night sessions when the equity markets are not open. This leads then to exiting the ETF that went along with in on the next days open. Rarely will the market just stay still during that lag period. As a result, the ETF trades typically make either more or less than the futures trade. As a result I typically lower my risk % some just to keep from taking a bit hit in case we get a huge overnight move adverse to the ETF position. In this case the opposite happened, I got a windfall.

I am still looking for a possible short term sell in the SP 500 this week, rooting for an up close today which could set something up for tomorrow.