Monday, November 28, 2011

Rumors or fact?

Lot's of rumors over the weekend. An Italian newspaper claimed that the IMF would save Italy. Maybe the US would intervene to save Europe and Germany and France would be putting in some extra efforts to save the euro(zone). All this created a huge opening gap, most indices up nearly 3% and small caps even >4%.

Of course with such a big opening gap, you don't expect a rally during the day. And indeed, no trend day up. The market however held strong during the opening of the session and even managed to make small gains. Than we started moving sideways forming a wedge/triangle. As you can see on the SPY-chart depicted hereunder, price broke down and quickly headed lower. However, a very strong last 5 minutes brought price back in the upperhalf of the day (and for tech and small caps even near the highs of the day!!)

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Precious metals were up together with stocks, silver the better of them, +3%.
Oil hit 100 again but got rejected by that level. It travelled down again under 98.
The euro wasn't really able to benefit from all the 'bullish' news, only up small compared to what one would expect after all these rumors.

With the surprisingly big opening gap, my small TNA-position from last Friday was a huge winner, up 10% at the open. I sold the entire position @38.26 (long Friday @34.10).
During lunch, market pulled back and it came down all the way to a 61.8% Fib-retracement (between morning low and high of the day). A hammer formed and I took another long in TNA (small position). Long @37.85, out 1/4 @38.10, another 1/4 @38.30 and the remainder @38.18 (see chart below).

5m-chart TNA (awesome close, liquidating the bears that shorted the triangle):

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