Another day on Wall Street

Another rocky week on Wall Street. Markets recovering falling recovery. Is this the end of a pullback? The morning trading looked promising as the markets opened higher (about 11 points) and soon reached almost 30 points gains. But I decided to wait and see how this rocky boat floats.


In the morning, I planned to open a new trade using SPX but since expiration for those trades would be on Friday (tomorrow) I wanted to give the market little time to go against me. So I decided to wait.

Yesterday, I posted in our Facebook group:

All trades put on today morning are in good shape to expire worthless. I will not be closing them but let them expire (unless this trend reverses sharply in the next 1 hour and a half).

I decided not to place a buy back orders on those trades as I pretty much considered them finished as winners. Well, the sharp reversal happened in the last one hour and a half. The stocks dropped and those trades turned into losers. When I could close them as winners for 0.05 debit (when the market was high) I didn’t and had to be closing one trade for 0.15 debit (still a winning trade though) and roll the other. It made me mad at me! And that made me think that I should place the buy back orders all the time no matter what the trade looks like in the morning as in this market, it can change all by lunch time.

Later during the day the market started losing its morning steam again and the gains were fading away. This seems to indicate that traders are selling any strength and shorting this market. However, this behavior is still within my overall expectation of the correction recovery. I never expected it to be a straight line up but a bumpy road.


If you looked at futures early in the morning (about an hour or two prior to market open, you could see a very read deep decline (at night, the futures were as low as 2686 but recovered to 2702 by 6 am):


So what pushed the markets up this morning?

Interestingly, we are witnessing what we have already witnessed for some time in the last decade. FED prompting and saving the market rather than focusing on monetary policy. I remember many times when markets were falling during Yellen chairmanship one or another FED official stepped out and said something to prompt the markets back up (or sometimes they said something crazy and slashed the markets).

This morning, St. Louis Fed Head, James Bullard, commented that “”The idea that we need to go 100 basis points in 2018, that seems like a lot to me… Everything would have to go just right. The economy would have to surprise on the upside a bunch of times during the year. I’m not sure that’s a good way to think about 2018.”

And viola! S&P500 jumped up and opened in green. And continued higher to almost 30 points gains… just to lose it in the afternoon again.


 · Trading activity today


A summary of today’s opening and closing trades.
(balance + $0.00)


Since the market is struggling now I am most likely going to be aside and just managing existing trades. We may most likely trade in a range but before I enter into that range, it needs to establish itself first.

We see weakness in the markets and that also suggests we may be sliding lower. Some technical analysts suggest that the market must close below 200 DMA to call this correction over and historically it may be the case as most of the corrections did close below 200 DMA but there were a few instances when this didn’t happen. This time we may see another exception to the rule. But do net bet on it. Caution is definitely advised.

Short term (maybe a few weeks ahead) we are in bearish pattern, long term we are still bullish. Remember, the economy is still very strong and expanding. Bear markets are not happening into a growing economy.

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