Trade against it
- Posted by hcpg
- on December 27th, 2012
Ever since the panic 50 point drop in the $ES_F last Thursday night we have been talking about a re-test of it during regular session hours. Today we came within 0.4% (5 points) of it — good enough in our book, especially when combined with Russell action. In last night’s newsletter we called for a support long 82.10-81.60 fifty cent support zone on the $IWM. Today’s low? 82.05. Bang.
Overnight lows often serve as a psychological magnet– and we’ve seen bottoms made when regular session tests the low and bounces. We like this scenario– follow through will be key.
The 100 sma and 50sma are the support zone we had as a long in the newsletter last night — and tweeted real time today at the 100sma. Perfect hammer on it– again, so far, so good.
This type of technical bounce with a two shot of 1) making higher low against overnight ES_F panic low and 2) hammering on an ascending 100sma on the IWM, we think is good enough for a short term rally within a news vacuum. In the end news will trump all, but in the meantime it could be a happier/holiday type tape for the market after today’s positive action. Trade against it.
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