The collision of global markets and social mood

Tuesday, February 12, 2013

Possible Volume Roll Over

Yesterday was so slow all I did was buy volatility. I picked up some more March VIX 15 calls at the end of the day. The longer the market sits at current levels, the more pressure and volume builds.

But there is something interesting. From a volume profile perspective, it looks as though it's rolling over.

Granted, it's only two days, but I thought it looked unusual.

Could there be a quick pop above yesterday's high? Why not. Could there be a new upthrust to the next Fib target at 1531? I guess there could. Certainly the market has momentum behind it that should be respected, but my gut is telling me that it wants to reload. And that means lower.

How much lower? Lower, but not below 1498.49. This still feels like a market that is trying to triangulate its way to a new high. Below 1498.49 would likely break the triangle.

It may sound extreme, but if the triangle should break, 1467.94 would be the next level of interest for me.

The point is I'm only playing this at the moment using volatility. I'm not shorting it outright because it hasn't given me reason to other that it's running on fumes. But it's been running on fumes for a long time.

When there are retracements, I usually enter to the long side with calls. I get out with profits. The retracements are shallow which suggests a strong market, but the internals stink, which suggests a market about to collapse, yet it hasn't happened. When it does and when it breaks something, there will be plenty of time to employ a different strategy.

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