What is happening with the SP?

We would like to send you a short commentary today regarding what is happening with the SP and why we are executing few trades, as we commented this past weekend.

In February, thus far we have executed only 11 operations when in January we had made 23.  In January, all of our operations were profitable but in February we have had 5 negative operations.  What is happening this month? And what is motivating us to be more cautious in our trades?  It is the low volatility in the SP during normal trading hours.

Here we can see the last 5 session for the SP futures where the price went from 1060 to 1100.  But, as you can see, the rises happened in off hours.  For example, on Friday, after the markets had closed, the SP 7 points; On Tuesday at 2am EST it rose 6 points.  And then, we have had sessions like the one yesterday where the SP spent the entire day in a range of 5-6 points.

With ranges so narrow, it is difficult for any technique to function.  If we have a stop of 4 points, we need larger for our techniques to work well.  We can’t trade like yesterday, for example, with the Evening Technique with a 4 point stop only to have to fight to close the operation with +0.25 points.  That is what is happening with the SP right now.

Tomorrow, SP options will expire therefore it is normal that, starting tomorrow, the market will begin to move a bit more “normally” than it has these past two weeks.

We don’t want you to think we aren’t operating because we don’t want to.  We aren’t operating because the market is not providing us clear opportunities to do so.  For example, this morning, following our normal technique we would trade short 1094.5 but, as you see, right now the market is at 1098, simply because we are at the same range as yesterday and almost without trading volume.