Friday, July 1, 2011

Friday June 1 Market Summary

Yesterday I posted about a possible up move in the markets despite technical resistance because of the low holiday trading volume. Today we got exactly that, but to an extent that even I didn't anticipate. The SPX rallied +19.03 to 1339.67, or almost $2 on the SPY. This is a very big move, so I'm glad I decided to wait until after the holidays to add a second round of shorts.

The trading session actually opened uneventfully and stayed in a narrow range, as you'd expect on a Friday before a long weekend. Then at 9:30ET, ISM numbers came out at above market expectations and the SPY spiked almost $1 within a single 10 minute candle. For the rest of the day, the markets floated on extremely light volume without ever pulling back.

It's hard to put much meaning onto this rally considering the volume, but the price action is all that matters at the end of the day. I'll continue to have a stop in place on all my shorts and will look to add further shorts higher up in the charts if the market continues to float. The market remains very extended and the probability of a pullback soon is still high.

If we do continue to rally next week, as we well may, I'll look to add more shorts on the market and on stocks at the the SPX 1346 and 1370 levels. I think it's unlikely we go as high as the 1370 double top, but it is possible.

Last night and this morning I posted several short setups that should play out when the market pulls back. And assuming we don't pull back before then, I'll probably enter some of these shorts mid next week.

I'm currently short and partially short the SPY and NASDAQ. I will be sure to advise of any future shorts on this blog and via twitter.

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