Holy Santa Claus Rally

OK, so a lesson today that will hopefully help someone else, just as it should help me.  I think most retail traders would have loved to see some retracement of yesterday’s move, just so they could get in.  I was one of those.

In fact, it’s been a tough 2 days of trading because the move is happening early and leaving nothing for day traders to latch onto.  I’ve successfully stayed positive, but kick myself when I look back and see what the possibilities were.

So, see this first chart –

The solid red line is the session’s low up until the employment numbers-driven drop…1,202.75.   After numbers came out at 7:30 we saw selling due to, yet again, more bad jobs numbers.  A reasonable catalyst to drive us into a better price to start the day.

Funny, though, it only drove down to test the prior low, grabbing stops below the low, and then continuing higher.  A great lesson – pay attention to where those “bargains” might actually be and manage risk with smaller sizes – not exact stop levels.

Don Miller talks about this in tonight’s post on his sight and I encourage everyone to watch it HERE.

Second, the dollar has indeed posted a swing high and followed through to the downside today.  A wicked reversal in the morning conicided with that ES pop.  I’m looking for an intermediate move to 79.50 or so very soon.

And finally, the S&P looks ripe for new annual highs.  I want to see how this takes place, but for now we are overbought and could use a rest.  I doubt much happens before 7:30 AM when Nonfarm payrolls come out, but after that it’s anyone’s guess.  A sell-off on good news or a pop on bad news?  Neither would surprise me at this point, but it sure looks like 1,240 is at least where the market wants to go.  How long can we hold up here, though? Don’t know, but monthly R2 is 1,244 and that’s my target area.

Trade well and trade the extremes!

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About thefront9

Independent trader with a flexible approach to the markets. Position trading, swing trading and day trading using Futures, Equities and Options. This site is intended to help others (and myself) see what I see and to stay true to the discipline of making trades at the extremes. Contrarian and TastyTrade addict! Living in Texas with my family, helping others and maybe playing some golf from time to time makes life busy and great. Add a little music and humor and that just about sums it up. Trade the extremes and manage risk.....always!
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