Tuesday, October 18, 2011

Big last hour surprise

Market undercut yesterday's lows overnight and retested the premarket low in the first hour of the session. The low held and price rallied for most of the day. Tech was actually lagging today, while the last few weeks it was always leading the rallies.

About an hour before the end of the session, news was published that Germany and France agreed on a new 2 trillion rescue fund. Market immediately went berserk and shot up almost 1.5% in under 15 minutes. Yesterday's pre-market high was the initial point were the rally stopped. After a firm pullback, bulls brought price back near the high of the day, but in the last 5 minutes the bears took control.

SPY 5m-chart:

Daily charts DIA, QQQ and SMH below:

Gold and silver gapped lower, especially silver (3%). Both rallied together with the indices and silver even closed in the green. Oil also made nice gains, +1.7%.

As depicted on some of the above charts, more consolidation is welcome. But the news about the Europe rescue fund might trigger more buying. We are right under resistance on several charts (except tech which is already above resistance). A follow-thru day tomorrow, and anything is possible..

See my previous post today for some closed positions in morning trading.
I also got stopped out of EDZ halfway through the session (+2.04%). Back to 100% cash for now. Only made minor gains, but enough to make up for the small losses last week (and a little extra), when trying to call a bottom in the market.

I tried to short a tiny SPY-position at the 122-level (yesterday's high). But then news about the rescue fund (see above) came out and price shot up to $123.50 in no time. I still regret missing the intraday bullflag breakout (see SPY-chart above).

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