Yesterdays afternoon volatility coupled with with apple’s sell off made for a flurry of speculation the grim reaper is here to claim all the bulls.
Apparently not. Most if not everyone, including myself; got their faces ripped off if you took home OTM Puts for protection.
When thinking in hindsight.. think back to theVIX buying and vol spikes last week.. volatility & put call ratio surely did hint at a possible correction. Remember you obtain insurance to protect a valuable asset from harm.. if harm comes insurance can help make you whole again…… perhaps a winning long position which they intend on keeping long…. in either stocks or index’s.
foresight..Confirming the protecting longs thesis today was the break down in 5s, 10s, 30s aided by DX weakness… (printing fears?) If you remember back to last week the 30 year broke down mid day on high volume giving a boost to stocks.. Today we saw very similar action as 142.25 failed in ZB, this sent the ES into day highs..
Yeah i hear you….the rally seems to be getting old but you cant fight it and with what we saw in MSFT and HPQ today, perhaps we are seeing rotation of dollars in and out of individual stocks. This could be a the new form of profit taking. PM’s selling off some of their winners to fund the purchase of under performing stocks. Chasing alpha..
The rally started today off 1335’s… ES had not visited the area since Friday 2/10/2012. NDX break out coincided with MSFT making a high over 30.74 as well as apple reversing under 500.
The 1335 has proven to be very resilient and should be noted the level has seen substantial volume and trade activity.. 1335 is very similar to the 1346.50 (green dashed line).
The 1212 high for the ES is 1358. If we can trade over 1357 and hold that could convert into 1358’s trading and a new set of buy stops could be lifted into 1360’s. The downside ledge is a steep one because of how steep the rally was today.. we rallied through 1345’s 1350’s and 1355s.. thus 1355’s is very immediate support with 1350 support giving some solid breathing room.