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

Entry Here:

Long 904 is 9.25 pts off the high - close to the 10 pts theorized -

Now 905.50 -

Upside is 5 pts or 909, stop is 901.

Raise stop to breakeven after 15 minutes.

Exit after 30 minutes.

11:34AM

NEUTRAL MARKET CONDITION: FRIDAY 11:09AM

No trades yesterday setup.

Today I see that conditions are ripe for continued sideways action - the cross currents are in place to keep the market oscillating in a range and right now I see 10 pt rallies in ES as a short sale and 10 pt declines as a buy, each risking 5 pts and targeting 5 pts.

There are bearish and bullish factors that may very well keep us contained the rest of the day -
bond market rebounding on weak PMI data and deflation concerns and deeply oversold technical condition of the bond market is a bearish factor. The rising YEN is a bearish factor and the bearishness expressed in the options market is a bullish factor as I see it.

902.25 LOW in ESM9 since 9:30AM-
913.50 HIGH
906.50 last, +1.00 on the day.

I'll update parameters when I see a specific entry price.

11:15aM

Last Buy Signal Stopped Out at Breakeven 907

898.25 last.

I'm seeing a 913 to 896 correction in the ESM9 futures -

but I am not seeing a setup to give us a low-risk trade that I am familiar with.

It is tempting to buy just because the price is down and we are falling into what could be support zones - but I am not seeing what I often see at inraday market bottoms -

900.25 last...