Wednesday, October 12, 2011

Watch who you fade

We can’t remember a time where levels worked so well –  anecdotally speaking — it seems to us that market just keeps getting more technical.   Praise HFTs?   Since this rally started we have had only 2 fade spots on our newsletter (and both were posted also on stream) .  The first was to fade the jobs number pop last Friday, and today was 122 $SPY resistance.

Pretty amazing how these “obvious” spots are working.   Also a note of caution for those who we have heard  like to use the stream as a contrarian indicator — we were pleasantly surprised to see the short bias today.    Watch who you fade!

First gap fill is near $SPY 120 and second support is near 50SMA (and second gap fill near 117.25).   Let’s see how much the bears can push.       The most bullish scenario for us would be a fade to around 117.5 to put some fear into the bulls and then a reversal higher out of this range.