The gyrations in the current market environment are incredible from day to day and week to week. For traders like myself this presents some excellent opportunity to take advantage of strong trends albeit in both directions.
After having a 20% sell off followed by a 10% rally the market could be staring in the face of a lower high and a move back to test the lows from six sessions ago. The pivots have been working very well so know the levels of importance, 1178 on the ESZ1 (S&P December Contract) is important support today. European sovereign debt is still a problem and Obama is going to put a bandaid on a broken leg with his deficit reduction plan today.
With the futures pointing lower this morning it is important to understand that these large gap days are not ideal for me as a trend following, mean reversion trader. This means that I must be patient and wait for the inevitable pullback into resistance that will happen at some point today and if it does not pullback to stay off the keys.
It is also very important to know which names could fall the hardest today and stay focused on shorting those names. This list will include the banks that have been weak except for a two day rally last week that we called here at DTW. Big cap tech has been strong so I will not try and short those names. As the day moves on I will compile my list and make it available.