Wednesday, January 28, 2009

Revisitng SPX range and more...

We (and everyone else) have been talking about the wider SPX range.  Call it 920-820 roughly.  We have been experiencing range bound trading across many sectors.  The XLF briefly broke low, but for now has made a double bottom. 

I am a short term trader.  I do not execute a short term trade solely based on the above chart patterns.  But I do combine them with what I am seeing during the day.

Outside of some XLF/financial trades last week we have been experiencing:

  • weak stocks bouncing
  • strong stocks stop going up
  • frustrated traders
  • lots of reversals off the open
  • less volatility
  • less movement in major indices
  • "one-off" trades working. (financials last week for a bit, education stocks a few days ago)

I combine all of the above with the bigger picture (charts above).  We are rangebound and every intra day trader needs to adjust their size, strategy, aggressiveness, etc.. accordingly. 

Trading RM has also developed the Trading RM Oscillator to help our desk determine the environment.  Login onto to download our Trading RM oscillator as one indicator of the current trading environment.  See previous posts for a more complete description of the Trading Rm Oscillator. 

The most recent Trading RM Oscillator is posted below.  We can see a slight hook back down to 2008 holiday levels.