BUY SIGNAL: Stop under lows or 5 pts in S&P500

It has been 3 hours since the low was made at 11:40AM today.

Since there was strong put buying up until that point, this is a low-risk buy signal.

Target 5 S&P points or 50 DJ's points.

Risk 5 S&P points or 50 DowJones points.

Raise stop after 1 hour to breakeven.

2:45PM

Generally bearish environment - sell signal

Bearish indications were very strong earlier, but have softened somewhat -

Sell 4 pt rallies off the low in ES instead of 5 pts...

Target 4 pts. Risk 3 pts.

899.25 low, so sell anything over 903.25.

11:06AM

ES hit 7 pt profit target - 907.50 to 900.50

Bearish reading in first 30 minutes today

Even though we are near important options expiration support in the S&P500 at 90.00 -

There is a very negative setup occuring here this morning where we should be selling any rallies of 50 Dow Points or 5 ES points. 902.5 is the low for ES, so enter short at 907.50.

Lower stop after 30 minutes to entry/breakeven -

Target 7 pt profit.

10:12AM

Buy Signal: Short term Only 1:52PM

ESU9 908.25 Low, 911.50 last, 914 target.

Buy 911 or better with a 908.50 stop.

Reverse and go short at 907 if stopped out.

Use a 911 stop once short.

The setup here is high put buying, short term which could set up a short-covering rally.

The background is that options expiration is this Friday and 900 is a level that will likely attract the market.

910.75 last
1:53PM

Awaiting a signal -

Awaiting more extreme readings in the indicators I am tracking in order to make a market call -

At 10:05AM 930.50 last, "Heavy Put Buying" strategy

Overnight high is 939.75, current low is 928.00.

We are sitting at 930.50.

Since we are turning up and holding above the lows here, I suggest going with a "long position", but reverse and go short on a new low, risk no more than 3 pts in each case.

If the put-buyers are front-running their own sales, then we'll move aggressively lower today.

If we do get short on a new low under 928, then after 30 minutes, lower stop to breakeven.

Tim

BUY DIPS of 5 pts OFF OF HIGHS

946 recent high at 12:55PM

941-940-939 are decent entry prices for longs -

I view 948 as a great exit for any longs.

Risk 3 pts from entry. 938 stop. 948 target.

@ 941, risk is 3 pts, upside 7 pts (3:7)
@ 940, risk is 2 pts, upside is 8 pts (1:4)
@ 939, risk is 1 pt, upside is 9 pts (1:9)

I recommend 1 of each, if you can afford the loss.

The environment is BULLISH here - indeed -

945.25 last 1:01PM

Long Entry - 937 or better - ESM9

First 30-45 minutes is again nervous "call selling" on the price decline - I saw and called out an entry at 936 on the ESM9 and think 5 points is possible from this oversold level, risk was 4 pts, now raise stop to 936 - (trading 939.50 as I type) - target is 941 on this oversold bounce -

There is a good chance we will see an extra-ordinary powerful signal today that is worth 10-15 handles in the S&P - so be ready for that signal - be on alert -

For now, trade oversold from the long side and exit on strength -

Friday, June 5, 10:26AM

Long from 938 - hit 941.25 high - Raise stop to breakeven

3:49PM

BUY a drop to 938 as of 2:38PM

Risk 2 pts.

Target 4 pts.

939.50 last.

10:24AM - BULLISH environment to buy today -

Nervousness abounded in the first 30-60 minutes -

With the S&P now revisiting the lower end of today's range, I believe this is a low risk buying opportunity.

Buy here - risk 3 pts - target 4 pts.

12:04PM

CLARIFICATION

The first hour of trading showed strong sell interest and may be a sign of a short term bottom for today. The way to trade this is to wait for 3 hours and be assured the sellers are not still in the market, which is the reason for the "REVERSE AND GO SHORT IF STOPPED OUT" at 927 (from long position at 932). If the market can break to 927 then I will presume the sellers have the upper hand for the day and we should go with that trend and once again, risk 5 pts in order to make 7. Once short, lower stops to breakeven after 30 minutes if still in the position.

Background noise today - Crude oil is down and that is weighing on the S&P. The S&P and crude are still tightly correlated, unfortunately. Bernanke is testifying so that has the market 'on hold'.

11:56AM

New Buy Signal at 10:30AM is an hour old - but still valid

Strong indications of fear suggest a tradable bottom for today:

BUY

Risk 5 pts (reverse and go short if stopped out)

Target 7 pts.

Raise stop to breakeven after 1 hour.

932 last.

Buying opportunity - Risk 5 pts - target 7 pts

ESM9

Strong call selling is indicative of a "wall of worry".

Buy this dip from 949 to 944.

Risk 5 pts from entry.

Raise stop to breakeven after 30 minutes.

Comments on Yesterday's Action

Monday, June 1, 2009 -
I witnessed the first bearish activity in the market rally so far -
I will see how this translates into market action today -
Call buying on the price rally is a sign, short term, that we could see a reversal to the downside.
9:28AM
Tim West