Thursday, November 12, 2009

Today is a classic example of the biggest moves happen when you least expect them. (reverse psychology) The slam down to the 1090 level on the S&P500 cash market was a tell tell sign something could be up.. We traded sideways from that level without really ticking higher, then eventually the slam came in on higher selling volume than buying. Everyone I saw was trying to catch the knife, including the algo's which were absorbing every single seller until im sure their daily buying power was exhausted. Boom! once this happened we sold off to 1085 even, algos sold all the futures then probably got short perpetuating the move. Once the selling accelerated we moved through the 1085 level on momentum. Goldman's buy the low tick program was in full force across the financials, even in its own stock.(notice the red circles in the chart).

What i took away from today was stay in the game, keep feelers(small size positions which keep you in the market on both sides) out in the market. I had a FAZ feelers small size along with a few longs. Once i started realizing vol was moving up and ES came down, i added to the position I

Interpreting the tap correctly on a day like this is critical for being on the right side of the trade. I wont lie i was very confused as to where we were going to trade, though Goldman selling and failing to break above its previous day high alerted me sellers are in this market.

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