Well market had closed at it's highs the previous 5 trading sessions, so what do you do to alleviate the overbought condition? Send out some really bad consumer confidence numbers and bingo.... problem solved!Market rallied and double topped during globex session, prices where immediately rejected as Dollar rallied and Euro sold off.
By 6:30am we were barely holding yesterday's IB low and well below Value area low. The market opened below value (sign of weakness), but A/D initially wasn't looking bad as Decliners had only a 1/1.5 advantage, initially this is a buying opportunity as Market internals not confirming price under value.
Thus we saw prices rally to test the Point of Control and close its gap around 9:47 am. Consumer Confidence numbers came out at 10am, they were well below estimates, thus bringing in longer time frame sellers and the market quickly sold off on the news.
A/D line became increasingly more negative after the numbers getting to -3/1, with heavy negative breadth as well.
The rest of the day was rather uneventful as bulls/bears battled, the bulls defended last week's midpoint and the bears tried to defend the IB low, market ended up closing inside the IB, but well below value.
Look for Bernanke tomorrow to move this market one way or the other, although we saw a lot of selling, the NYSE tick never hit any extreme levels, so it wasn't heavy volume panic selling. Don't be surprised to see this reverse and bears lose all of this ground tomorrow. Regardless, we must keep an open mind in this market.
Trade(s) of the day-
#3 -Short the Point of Control right before the numbers were released by far! It was a risky trade but would have paid off exceptionally well in a small amount of time. My type of trade!
#4 - Long at the -23% range extension off the IB, black box trading at its best!
