Markets Rejected

ES 60 min

SPX Daily

Bot FB March 55 Puts @ $1.04

200% Short /ES @ 1791.50

Markets are now testing ST and IT resistance.

/ES 60 Min

SPX Daily

Whipsaw

I was shaken out of my short from last night on the move back above 1774.50. I'm flat now and will look to re-enter above 1786.50.

200% short /ES @ 1769.25

The markets have reversed and I'm back to my full short position.

Support has held...but for how long?

Markets on sitting right on major support and have been able to hold on for 2 days now. The following chart shows the 1765-1770 area that has held the market up over the last 48 hrs. If this is breached overnight then a waterfall type move could happen. If we trade above 1774.25 in overnight trading then we could see another move back towards the 1793-1797 zone. I will probably cover my ES short on a move above 1774.25 tonight and look to re-enter around 1790. Also note, the VIX was pushed back today by daily resistance so that is also supportive for the bulls, at least in the short term.

ES 120 min chart

VIX daily chart

**Trade Note**

I closed out my 176 SPY Puts that expired in FEB last Fri but just realized I did not post it. I had been underwater almost from the moment I bought them. I was able to sell them for $2.29 so the .52 profit was welcomed since my timing was so bad. It was a small position which is probably part of the reason I forgot to mention it.

200% Short /ES @ 1786.50

I am back to a leveraged short position in the markets. After reviewing the charts and seeing weekly resistance being tested in the SPX I decided to re-enter my positions I exited Friday and Monday.

SPX Weekly

SPX Daily

A daily close above 1793 on the SPX will probably negate the current down move. However, I expect a move to 1650 before this round of selling is over. The next 3 days and 1st week in February will be crucial for the bulls. As shown in the chart below, once 1750 gives we should see a quick swoon to 1650-1700. At that point the backbone of the bull market will be broken. Volatility will be the name of the game in 2014 and should be a great year for traders.

Bot 1/3 of /ES Short @ 1770

I'm now out of 2/3 of my short position because from 1761-1772 there should be some sort of bounce. Possibly up to 1800+. Depending on what this afternoon looks like I might go ahead and close out the last 1/3.

Covered 1/3 of /ES short @ 1785