es m0nday, page-26

After closing out my shorts on Thursday night/Friday day, I had quite a relaxing weekend.

Back to the grind today.

After all the fluctuations on the weekend, we're pretty much where we were on Thursday night, with the XJO kicking and poking its head over 4500. The only big difference is the massive Nike-like swoosh of the AUD.

Germany's DAX closed roughly 100 points off its recent highs, with the SPX still struggling to break 1100. I wonder if the SPX turns around and heads north, will the DAX punch through recent highs and head straight to 7000?

The SPX has held over 1080 three nights in a row, which is a pretty bullish sign. I remain to be convinced, but I'm starting to lose confidence in a prolonged decline in the markets, and conscious of the fact that we are approaching end of quarter/half year where things get a little disjointed.

For me, I think the trade is going to be a tight band range. The range is set to be back to the range we saw pre-Jobs data thump, two Fridays ago, that is to say 1105 short and 1075 buy, until further notice.

SPX remains technically sound, as far as charts go, and yesterday's price action reaffirmed it. It tried to carry on above the 1105 for about 3 minutes before it got nosebleed and sold off back down to 1090.

A week Asia/Europe should see it back down towards the 1085/1080 level and the US market will surprise everyone by finishing spot on 1105 tonight, only to suck all the bulls in the next day and get belted back down to 1080.

This is choppy waters territory, where the market has no clear indication where it wants to go. There are no clues as to where the real money is positioning itself, EURO/USD has recovered 200 bps, gold is pushing record high, indices look set to rebound, AUD is exploding upwards, commodities and oil seem to have found a bottom. Volatility is still in the 30s.

So I will admit that I am at lost with the direction, and will revert back to the pre-jobs thump trading range, where I'm going to short at 1100 and cover at 1080.

As for the XJO, I feel there are too many shennanigans going on this period for me to be active in it. It's just as likely to be down 100 points today as it is to be up, only to reverse all its gains tomorrow, on a flat Dow.

I'll get more color later, after a few phonecalls, but for now it looks like it wants to stay within the 4500-4520 for the entire day, at least until it gets some direction from HK or SPX futures.