We have come out of the gate gangbusters this morning to start the new year. This is to be expected for several reasons. First, we have a major bull market on our hands, so the trend is up. Second, the inflows in funds represent money that gets put to work the first couple of days of the new quarter and month. This is why in general there is upward bias at the beginning of months overall. Third, the market is being manipulated higher so why should just the semantics of a new year matter?
There are alot of statistics out there some of which I have shared in here recently about January performance and what that means for the year as a whole. The traders almanac is a good source for you statistics junkies to consult to get these. The bottom line is that the odds favor an overall up year if we do well in January. Although I have mentioned that I was looking for some sell signals at the end of this week or the beginning of next week, that does not mean anything for the year as a whole. First, those signals may not trigger. Seondly, if they do they might be wrong. They are also short term signals, they mean nothing for the broader context.
I did have several buy signals for individual stocks today but these big gap opens have negated all of those. I don't like chasing gap opens. I also had a few stocks/etf's I wanted to short, but this big up move has made those unlikely fills at this point. I guess I am a spectator for today. I did get stopped out for a 9 tick loss in the bond trade I put on Friday. Let's face it when you get a monster ES up move overnight, a long bond position is not where you want to be. I still am looking to get long bonds again down here if another buy signal shows up.
Here is a trade I am sitting on waiting for an entry, CRUDE OIL.
There is a world of bullishness in this market, so of course I want to short it. We do have a possible trap false breakout today if it were to reverse tomorrow. Will it? Who knows? However, if it does I will get short here. There also seem to be some of the oil stocks setup in a similar fashion, so I will also play those if this reverses.
Here is a weekly chart showing the COT picture for Crude Oil and I have red arrows pointing out the extreme positions at hand. The small speculators have a huge long position and the commercials an extreme short position. As we have seen recently, this can go on for much longer that it used to be able to before a market turn happens, but inevitably this leads to declines.
I do not see much else now, other than staying out of the way of the up momentum in most places. If you are long stay long. If you are looking for shorts, wait, the time is not here yet.