Tuesday, September 9, 2008

What a difference a day makes

Notice yesterdays profile and compare that to todays. Not very dissimilar at the surface for the first half. We did open above the value area. Until the break down right before lunch I personally heard a pundit ( someone who is very well respected) assert that yesterdays lows will hold with quite a bit of confidence.

What was different today? Well first, it was a completely different market. the IB did an open drive to the downside like yesterday. Narrower IB (relative to the day before) with the dominant flow to the downside. However what was not visible in the chart and profile was the mood of the market. We had a double reject of the dominant flow during the IB. But the price rejection from the B period high was much stronger and the buying at the A period low. The mood began there. My trades got chopped a bit as well . The break of the IB low and range extension in the C period was a good entry with the dominant flow. At the low of CDEFG periods however there was a big difference in the mood (vs. yesterday). We were -20K delta in the big contracts, -50K in the general chart and failing to make higher highs. Read yesterday's post and see the difference. The retrace of the H period was a great high probability opportunity to the shortside. The same level that had the high confidence long trade had become very vulnerable. It did take a while to break that level. The news of Lehman's failed buyout talks took the financials down the toilet.

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