The S&P 500 traced an outside reversal pattern to the downside yesterday.  The last instance of such an event occurred on August 1 which preceded a near 16% drop in the blue chip index just six trading sessions later.  I suppose this does not instill any confidence in investors going into Ben Bernanke’s highly anticipated Jackson Hole speech, but I will assuage those fearful of another leg down in equities by arguing that the fundamentals will always trump the technicals if the former has enough direct influence on the broader market.  Certainly, this morning’s speech qualifies as such an externality.

I am not predicting that whatever spews from the Chairman’s mouth will send stocks soaring, for current mainstream consensus has forecasted a likely sell off.  Perhaps, traders already booked Continue reading »

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As a Lehman summer associate many moons ago, I split my ten weeks primarily between two desks – High Grade Corporates and Equity Program Trading.  The assignment coordinating gods smiled upon me as both groups were crown jewels at the bank, run by top shelf management with impeccable reputations and unmatched ability.  As part of the program, I did get to sample a few of the different areas on the Floor as we plebes needed as many people as possible to go to bat for us to secure the ultimate prize of a full time offer for the following September. 

One morning when I found myself on the Govie Desk, the Durable Goods numbers flashed across the Bloomberg of the trader I was sitting next to.  The headline ripped consensus which instantly sat on the Treasury market.  The economist for the firm who was unabashedly Continue reading »

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Since I began writing this commentary over five years ago, I have listed key technical benchmarks for the S&P 500 E-Minis after the main body of the note.  Although it attracts the least amount of attention, I share these key support and resistance points as an additional tool to reduce slippage for execution traders.  I never will judge the value of the content I provide from the written text as I leave that to those who choose to take the time to read it; however, I will put these index levels up against anyone else’s in terms of quality.  In fact, paper trading a futures intraday model against these metrics has produced consistent returns in the high-teens with only modest drawdowns.

The secret in identifying support and resistance Continue reading »

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