Interesting market eh?  As I remarked a few weeks ago, we are fully into a new cycle of trading where outside political and macro news will effect the market on both the intra day and shorter swing time frames than it had during the major trend leading up to this sell off.  You’ve got to keep your risk low and position sizes smaller right now if you are playing shorter time frames, just take a look at what happened to the market over the past day.

When I got in this morning the futures were flying on the back of news that Trichet had left wherever he was for what sounded like an emergency ECB meeting.  I am 99.9% sure that Greece is going to be bailed out, everyone gets bailed out, because no one is willing to risk the system to make a point right now, everything is still to fragile, if not being a house of cards to begin with.  The IMF, or Germany, or the whole EU for that matter will deal with the Greek mess, and we will get on with our merry lives.  But the market is acting like an unstable bio polar maniac right now, at one point we lost 10 $ES_F points in 30 seconds.  Yea, you read that right, it’s insane.  Add the fact that for some odd reason liquidity has completely dried up over the past few days, exhibited in wider spreads across the board, and you’ve got a volatile market.  My advice to you, don’t be leaving your sear during the day, and get yourself a good source of real time news, a la briefing.com.  Oh and by the way, another VWAP close, algos ruled this afternoon.

When I’m trading shorter time frames, or just trying to judge market direction, I’m looking for clues from the 5 day moving average.  Just take a look below to see how the market has reacted to the 5 day over the past few weeks.  Long swing positions should not be established below a declining 5 day moving average, shorter intra day trades are fine.  The 5 day moving average has also been a great place to take intra day short positions with tight stops.

The key to this market, as it has been for the past few weeks, is the action in financials.  We are bouncing around between two major levels, a break in either direction should lead to a quick follow through move for the market.  Below that green line of support and the simple 200 day moving average, and this market could really fall apart.

In conclusion, it’s really a wait and see market right now if you’re playing longer time frames.  This is the reason you haven’t heard much from me on this blog the past week or so, frankly there isn’t a whole lot to write about.  We could be setting up to put in a week of dojis followed by a massive up day that confuses the crap out of everyone.  I feel this is the most likely scenario.  After that, let the chop begin.

I’ve got to apologize for not posting my shorter term swing trades in the trading book.  I’ve got a ton going on right now, between my own firm and StockTwits, updating that just isn’t a priority.  I have been updating the momentum book at the end of the day, positions there accurately reflect the holdings and performance of that strategy.  I will most likely be taking the long/short strategy off the web site though, it makes no sense to keep it up there outdated and not inclusive of my actual trading.

By the way, so many amazing things coming your way in the next few months regarding StockTwits and Chart.ly, it’s going to blow your socks off.

Make sure to check Chart.ly as I’ve posted some good setups there tonight.  Peace.