FulcrumTrader
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Friday trading in the "ES" had a very rare event that I only see a few times a year. The markets had traded lower in recent days off highs at the 1148.00 level in the S&P500 Emini. Friday pre-market action printed a new lower low to the 1104.75 level right into the +40 point Commercials profit target zone. Commercials who had accumulated heavy SHORT inventory over a several day period at the 1148.00 to 1144.00 zone of price now had price trading right into another zone for profit taking.
As the US cash session opened on Friday the "ES" was able to trade back up to the 1111's where it was then immediately sold. Within the first hour of the US cash session the "ES" printed another new low to the 1101.00 level of price (10 points off the 1111's). Trade to the 1101.00 level brought in immediate short covering into the order flow and then new initiating buyers.......next, we trade right back to the 1111's (10 points off the 1101's).
At this point, I was starting to notice that we were showing very large SHORT position accumulation at the 1110's/1111's taking place. With each price rotation back up to the 1111's I could see the SHORT position was growing in size.......very big size, like over 50,000 contracts!
What makes this type of inventory build very rare is the fact it was happening JUST ABOVE recent lows after a multi-day sell off. Usually this size of accumulated SHORT inventory takes place at fresh new highs, as Commercials start to load up in a small range of price (like they did at the 1144.00 to 1148.00 zone of price). As this very large SHORT inventory was building just above fresh new lows, I was thinking that Equities Funds/Institutions must be building up a very large hedge on the day before they start dumping into the closing hours. Since I knew that Commercials do not typically initiate large SHORT directional trades just above fresh new lows, the Equities hedge game seemed to be in effect.
As the markets traded into the final hours of the day, it is very easy to see that Equities Funds/Institutions transitioned into a full SELL PROGRAM dump mode......and the markets eventually printed 1086.25 LOD for the "ES" just before the end of the cash session. BTW, the 1088.00 to 1084.00 zone of price is the +60 point profit target area for those Commercials who sold the 1148.00 to 1144.00 Delta Zone of resting SHORT inventory.
We ended the last portion of the Globex futures session Friday with a small SHORT covering rally to the 1091's (20 points off the 1111's). It looks like Equities participants on Friday decided to start locking in profits near recent highs for the held LONG positions they have been building up since the March 2009 lows. I am glad we are getting volatility back into this market and I look forward to next weeks action.....should be VERY INTERESTING!
http://www.charthub.com/images/2010/01/23/FulcrumTrader_CD
Equities late day SELL PROGRAM dump........
http://www.charthub.com/images/2010/01/22/FT_NYSE_TICK
As the US cash session opened on Friday the "ES" was able to trade back up to the 1111's where it was then immediately sold. Within the first hour of the US cash session the "ES" printed another new low to the 1101.00 level of price (10 points off the 1111's). Trade to the 1101.00 level brought in immediate short covering into the order flow and then new initiating buyers.......next, we trade right back to the 1111's (10 points off the 1101's).
At this point, I was starting to notice that we were showing very large SHORT position accumulation at the 1110's/1111's taking place. With each price rotation back up to the 1111's I could see the SHORT position was growing in size.......very big size, like over 50,000 contracts!
What makes this type of inventory build very rare is the fact it was happening JUST ABOVE recent lows after a multi-day sell off. Usually this size of accumulated SHORT inventory takes place at fresh new highs, as Commercials start to load up in a small range of price (like they did at the 1144.00 to 1148.00 zone of price). As this very large SHORT inventory was building just above fresh new lows, I was thinking that Equities Funds/Institutions must be building up a very large hedge on the day before they start dumping into the closing hours. Since I knew that Commercials do not typically initiate large SHORT directional trades just above fresh new lows, the Equities hedge game seemed to be in effect.
As the markets traded into the final hours of the day, it is very easy to see that Equities Funds/Institutions transitioned into a full SELL PROGRAM dump mode......and the markets eventually printed 1086.25 LOD for the "ES" just before the end of the cash session. BTW, the 1088.00 to 1084.00 zone of price is the +60 point profit target area for those Commercials who sold the 1148.00 to 1144.00 Delta Zone of resting SHORT inventory.
We ended the last portion of the Globex futures session Friday with a small SHORT covering rally to the 1091's (20 points off the 1111's). It looks like Equities participants on Friday decided to start locking in profits near recent highs for the held LONG positions they have been building up since the March 2009 lows. I am glad we are getting volatility back into this market and I look forward to next weeks action.....should be VERY INTERESTING!
http://www.charthub.com/images/2010/01/23/FulcrumTrader_CD
Equities late day SELL PROGRAM dump........
http://www.charthub.com/images/2010/01/22/FT_NYSE_TICK
