Tuesday, December 23, 2008

Tuesday Notes - Illiquid Market

2:24pm My interest in this market continues pretty cool on this unofficial vacation week, and like yesterday, it's pretty much a scratch on the day thus far at -$7K which reflects the horrid pace and complete lack of emotion in the market, which will be even worse tomorrow and Friday.

For those new to my diary (and yes, that's all it is), I make most of my keep by providing market liquidity and fading strong market emotion in a market with a clear and smooth flow (confirmed by indicators ... NOT the other way around), both of which -- liquidity and flow -- have been markedly absent in recent days.

2:43pm Of course the moment I write that, the market ignores me. Short-biased on the early PM bull trap. [I'd also tested a long on the attempted break north and scratched it.] Shorted up to 863 covering down to 861 on the first break pullback. Back in cash to see if the flow gets any better. Longs are stuck on the trap, but how many? If a bull trap exists and no one's around to trade, does it make a noise? VIX sneaking up.

2:48pm PM similar to Monday's trade for now with multiple scalp opportunities in a very thin market ... shorted up to 860.50 covering down to 858.25. Still don't care for the pace and keeping sizes light. Can't remember the last time I had 100 contracts on. With this depth, I'd take out two levels.

3:12pm Shorts not realizing the illiquid market and forgetting to cover getting hammered again like yesterday ... 7 1/2 point ES pop. Know your conditions ... duhh ... this isn't October!

OK, kept it light on another scratch day, although narrowed the completely irrelevant chip stack nick to under -$2K with the afternoon sequences.

A reminder that Globex closes at 1:15pm ET tomorrow and doesn't reopen until Friday at 6:00AM ET. Eurex is closed until Monday.

2008 Earnings Trailing Stop Update:
2008 Net Gains (after all expenses) prior to today: $1,633,321
Tuesday Net Loss: ($1,718)
Updated Gains: $1,631,603
Adjusted Trailing Stop: $1,625,000 (No Change)

Note my comments to yesterday's post re: the stop logic and why it's so tight.

And so the vacation continues. Look for some 2008 stats later tonight as I begin to determine what the heck I did right this year.

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