Sunday, December 11, 2011

A few quick trading notes

It is Sunday night, Asian session. Illiquid nature of year end is making some trading vehicles speed towards the abyss, only to stop short of a total collapse. I expect this type of trading to be detrimental to many traders who will wrap their heads around just one direction on the road to Dec 31. This will definitely be (in my opinion) a two-way market for the next few weeks. I think that traders will be looking for confluence zones to enter and exit their positions.

1. Take a look at what is going on with gold tonight, for example. It has done everything I expected it to do. Since it topped at 1767 on 12/2, it has declined to retest lower trendlines. Tonight 50 dsma stop hunt was brutal. A quick whoosh of 23 points in a matter of 3 minutes has returned the precious below 1700. There is a laminate of 150 dsma, prior low, daily BB, and 11-month trendline @ 1670. Do you think there will be a few buyers at that level? I will be one of them.

click on chart to expand

2. I think that SPX is another trading vehicle many players are looking to buy on a pullback. They may get the opportunity this coming week, again. Inverted head and shoulders, which has formed on daily, would preclude that from happening under normal circumstances. But quadruple expiration week may just do the trick to deceive the most. There is a laminate of 50 dsma and well-defined horizontal support to buy against. I am a bidder at 1220.

click on chart to expand

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