Sucker Move – Don’t Get Caught!
There’s a sucker move building in the market this morning. Overnight futures (YM) went down to -60 and are now sitting at +4. Frankly, I’m not buying it.
The market action after the FOMC announcement would have normally shot to the downside (classic N pattern), instead all of that move jumped on into the close (bearish sign). During our team meeting last night I saw several charts showing little conviction to the upside and many more charts breaking down at 5 min, 15 min, and 60 min bars.
Once we get some confirming closes on the 60 min bars we will see a good bit of draft to the downside. Take a look at this chart on the Diamonds (DIA):
We got a gap up yesterday that didn’t quite get closed. If we get a gap up today then that will only add fuel to the fire for a quicker downside move. As such I would expect to see us hit our first target early. I’m going to use this as an opportunity to BTC (buy to close) some short Nov puts. If we hit the second target I would expect to see a little bounce.
All in all I’m not expecting a huge range today but I would watch out for some burst of violence.
Mojo
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Mojo