Daily 10/14

[UrmaBlume 10]

Today's Market Report - ES - 10/14/2009

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Today's Numbers

0830 EST Export Prices, Import Prices, Retail Sales

1000 Business Inventories

1400 - FOMC Minutes

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This is the day that just might tell

Whether the markets are going to heaven or straight to hell

 

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On earnings and the expectation of earnings price has broken out

to new highs for the year.

At an hour and a half before the open night volume is 172% of average

with only an average buy bias and Net New Commercial Trade of +8,234 contracts.

 

[UrmaBlume 10]

At 0400 there was strong coordinated selling in all 3 US Equity Futures.

 

So far today that high is still holds.

 

[UrmaBlume 10]

Day Summary

WOW

While the Dollar may soon be worth a Dime

Stocks are headed to Heaven

[FulcrumTrader 10]

Brilliant posts sir.....just brilliant! Your posts are one of the very few that I follow on the various trading forums day to day.....thanks for you contributions!

 

Today as the ES traded beyond the 1086.00 level we had finally neutralized the last group of resting held SHORT inventory from "commercials" that I had been tracking. As equities side continued to fire off BUY programs towards the close today, the last group of significant SHORT holders in the ES finally bailed (this was SHORT inventory previously "initiated" in the 1072.75's to 1076.75's range of price). This is what I call an "inventory grab" event, and due to this taking place I started to ramp up a longer term SHORT trade in the ES today. Going forward, I will be an aggressive seller in the market as I see decent sell response while I try and build a longer term SHORT position to full size.

 

http://www.charthub.com/images/2009/10/14/FulcrumTrader_Z_11 (the orange horizontal lines on the lower Cumulative Delta pane show the last group of SHORT inventory I had indexed....you can see that zone was neutralized as we traded through the 1086's today)

 

With an absence of significant resting SHORT inventory now in place in the ES, it will take newly initiating BUYERS in the ES to advance price (those willing to pay very high retail prices of the upper most pricing levels offered in the current range). Also, now the equities markets with their BUY program activity do not have a large group of held resting SHORT inventory in the ES to drive into SHORT covering rallies (as the held SHORT positions capitulate their inventory adding to the buying order flow as they cover and go neutral). Other than the sell response as we finished out the globex session today, there is a void of resting held SHORT inventory in futures. These situations I have found over the past years do many times create pivots in the market....we will see.

Edited October 15, 2009 by FulcrumTrader

[UrmaBlume 10]

Brilliant posts sir.....just brilliant! Your posts are one of the very few that I follow on the various trading forums day to day.....thanks for you contributions!Today as the ES traded beyond the 1086.00 level we had finally neutralized the last group of resting held SHORT inventory from "commercials" that I had been tracking. As equities side continued to fire off BUY programs towards the close today, the last group of significant SHORT holders in the ES finally bailed (this was SHORT inventory previously "initiated" in the 1072.75's to 1076.75's range of price). This is what I call an "inventory grab" event, and due to this taking place I started to ramp up a longer term SHORT trade in the ES today. Going forward, I will be an aggressive seller in the market as I see decent sell response while I try and build a longer term SHORT position to full size.Images | ChartHub.com (the orange horizontal lines on the lower Cumulative Delta pane show the last group of SHORT inventory I had indexed....you can see that zone was neutralized as we traded through the 1086's today)With an absence of significant resting SHORT inventory now in place in the ES, it will take newly initiating BUYERS in the ES to advance price (those willing to pay very high retail prices of the upper most pricing levels offered in the current range). Also, now the equities markets with their BUY program activity do not have a large group of held resting SHORT inventory in the ES to drive into SHORT covering rallies (as the held SHORT positions capitulate their inventory adding to the buying order flow as they cover and go neutral). Other than the sell response as we finished out the globex session today, there is a void of resting held SHORT inventory in futures. These situations I have found over the past years do many times create pivots in the market....we will see.

 

Christopher,

 

Thanks for the very kind words and your very well thought out analysis.

 

The only caveats I see are that there are still very large pools of uncommited cash and that interest rates are so low that a significant portion of that cash will go to the market no matter what it is doing at the time.

 

The other caveat is that the very few fund managers I am in touch with that run over a billion have ALL learned the perils of longer term and have greatly shortened their trade horizons - turnover can mitigate risk.

 

You will be happy to know that it has finally cooled off here in Vegas - great time for your place at the lakes.

 

cheers

[FulcrumTrader 10]

Christopher,

 

Thanks for the very kind words and your very well thought out analysis.

 

The only caveats I see are that there are still very large pools of uncommited cash and that interest rates are so low that a significant portion of that cash will go to the market no matter what it is doing at the time.

 

The other caveat is that the very few fund managers I am in touch with that run over a billion have ALL learned the perils of longer term and have greatly shortened their trade horizons - turnover can mitigate risk.

 

You will be happy to know that it has finally cooled off here in Vegas - great time for your place at the lakes.

 

cheers

 

Yes sir...I will be in Vegas again very soon and I am looking forward to it (in the next week or two)!

 

I agree there is a lot of "scared" money still on the sidelines in cash/bonds, and there is a lot of money running in commodities at this time (like Gold, Oil, etc). We also have the "Dollar Watch" game going on now that has been helping equities buy side flows during this recent rally. All I am setting up for at this time is to catch an initial move (last one was just over 60 + points down to the 1012.00 level), so if it turns into an extended downside move going forward then that will be just fine with me....so I am starting to take my shot with the current Delta Volume Distribution picture that I see.

[FulcrumTrader 10]

We finally had some new SHORT inventory accumulation right at the very EOD Wednesday and then into the after hours session going into Thursday of just over 30,000 ES contracts. With a continued weak US Dollar still trading near lows and then Oil making a run today, the equities BUY programs held the ES from testing any near term support today. As we traded into the final hours of the US cash session, you can see how the equities side BUY program activity eventually enticed the large resting SHORT inventory in the ES to go neutral......

 

Images | ChartHub.com

 

Again, once the ES large resting SHORT inventory went neutral the market with a void of resting held SHORT inventory to drive into short covering was only able to make a 7 tick higher high. Then we have the cycle repeating as new sell response builds creating some new resting SHORT inventory. This new SHORT inventory was also then right away driving into SHORT covering as equities side ran some partial BUY programs again.....and finally right into the globex close we had another new sell response with another new group of minor resting SHORT inventory. Tonight in the lower volume after hours session as the EU trades, I have sold into the rally to the 1095's to this point for my longer term position building. Since we remain with minimal resting SHORT inventory going into the pre-market and then US cash session tomorrow, I remain a willing sell side participant.

 

The market at these high retail pricing levels needs the resting SHORT inventory zones as the means to advance the market through short covering rallies (usually enticed through cash session BUY program activity). These are the typical patterns that I see frequently prior to price trading back to a level of significant inventory support (where buyers would be willing to join the market again at better pricing levels than previously offered near the recent highs).

 

This is the market behavior that I actually enjoy watching play out as the "supply & demand" picture starts a transitional phase. 2008 and 2009 and been filled with these type of transitional events and I do not see anything going forward for the remainder of the year into 2010 that should dimish this activity (at least not with all the financial variables in the world economies ahead....currency shifts, additional bank failures, continued hyper-dimensional government spending, etc, etc, etc....LOL!).

[FulcrumTrader 10]

This market was ripe for the picking imo with the absence of significant resting SHORT inventory at the recent highs or at any levels above the recent high (market had not traded in the 1095's or higher in some time.....no one had resting SHORT inventory still held above the 1095's.....an inventory VOID). With the decent sell off so far today I was able to hit some good initial profit target levels with additional initial targets at the 1075.00 and 1070.00's. Below these initial levels, I will sit for a while to see if we can trade lower through some additional LONG inventory backed support levels before I take additional profits.....in the days/weeks ahead I will see if we can test that 1012's area next.