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15 April 2005 premarket comment


These comments relate to the Daily Notes page on 15 April 2005. (The Daily Notes page changes each day so these comments may not have as much meaning if read after the Daily Notes page has been updated the following day.)

The equity indices and the Euro FX all touched their 40 day lows yesterday. (Day in this context means trading day so 40 days is approximately 2 months.) I know that the indices that I watch also made new lows for the year and I assume that the other equity indices did the same. As I type this at 02:15 ET I see that the globex sessions in some of the equity indices are putting in new lows already.

According to the Trend %, the SP was the "trendiest" future yesterday with it opening near its high and closing near its low with a trend % of 94 which is very high. Back to back trend days are rare as there is usually some consolidation after a breakout but this didn't happen yesterday.

When we make new extremes over a long period of time there are (IMO) a number of new entrants into the market. These are the "much-longer time-frame-players." According to my charts, we haven't seen these prices since November last year and yesterday we broke the low made at the end of January in the ES. This means that very-long-time-frame-players are being stopped out of their positions that they've been holding since November last year and those that initiated new long positions at the low at the end of January. These are not new entrants into the market but rather old positions being closed out and this selling pressure pushes the market down.

Reasons such as this are often quoted as rationale for breakout markets and why they push further once a breakout happens. Anybody who bought and held a long position anytime between November last year and now is sitting on a losing position and has to make a decision whether or not to hold (or add to) that position or get out.

I hope you find these comments useful. The usual disclaimers apply. This is just an opinion and not advice. Good luck in your trading day.