Mark Moskowitz

16 days into the 2012 trading year and ES is trading very strange.  The broad equity index is up nearly 3% for the month but three days account for more than all of that gain.  In other words the other 13 days of the year have produced negative returns.

In addition to that on an intraday basis I have noticed a lot of intraday volatility but with no great trend and a number of signals being made throughout the day.  This is not my sweet spot as a trader since I like long trending moves and this seems to be too choppy for my liking.

We all know and love the gadgets that AAPL, Inc. puts out on a regular basis.  Although I am a PC guy, who does not love the look and feel of the newest IPOD or the user friendly nature of carrying around a sleek IPAD!  These items are not just functional but beautiful and are a status symbol for the cool in all of us.  But you know what, as a technical analyst and trader none of that matters to me.  What matters to me is how the charts shape up and where is the heaviest resistance and support.

So when this tech, nay stock Giant reports this afternoon, usually around 4:30 pm ET I will be nowhere near my computer and trying to trade this thing.  I will let all of the fundamental bullies buy or sell AAPL a million times over and let the stock come to my most important technical levels.

I have a long history of trading this stock, in 2008 alone I traded over 16 million shares of AAPL, and it used to be wonderful to trade after earnings.  Nowadays as the price approached Google-esque numbers, the spreads are too wide, the swings to viscious and the reward:risk ratio just unknowable.

As a 20 year trader I have picked up on patterns in the stock market and one such pattern which I fully subscribe to is that Fridays tend to reverse the dominant trend from the week.  With this holiday shortened week behind us and a 22 handle rally in the S&P 500 in just three trading days leads me to believe that today will produce a negative return for the index.

The basis for the theory is that I believe swing traders control the near term direction of stock prices.  Many in the swing trading community, including me, like to forecast a direction on Monday/Tuesday and exit those positions on Friday if stops have not been triggered.   So a week like the current week would say that long sided swing traders are still in there positions and will look to liquidate and take profits sometime around 10:30 am and start their weekend early.

Technically speaking the ES_H2 could use a nice pullback with a 70 RSI and 1315 looming as solid resistance.  As I write this, the index is on an early morning S3 pivot buy signal.  Identify the overhead resistance in your names and follow the direction of the big money.

First rule of trading is to know your strategy and to be perfectly clear on why you are executing a trade.  Trending environments are the best opportunity for my strategy as I am a trend follower.  Over the last four months we have seen some very interesting and distinct trends.

August and September proved to be difficult months for the major averages, but proved great trading opportunities for both intraday and swing trading techniques.  October was a strong rally month but also proved to be an excellent month as it was "Get Long and Get Loud" as my old mentor used to say when the market was rallying strong.  Then all of a sudden November came and the trend was reduced to days and sometimes simply minutes and now December seems to be carrying that same torch.

Referring back to the first rule, you must also make sure you make a lot of money when the market suits your style and sit back and be small when it does not.  As I head into my last day of trading as I will be on vacation, I think it is always important to reflect upon what has worked and what needs some work.  

This was not a very good week for the S&P or for many individual names, especially names in the Technology Sector.  The ES H2 (S&P Futures) are down about 3% for the week and with the technical indicators still mixed are not shedding much light on next weeks direction.  The MACD and the SMA's both made a negative cross these last two days and with AAPL, AMZN, IBM and BIDU breaking through support the overall picture does not smell rosy.

I would have thought that yesterday's test of 1200 on the ES H2 was enough to get this market rallying today but as of this writing the market is up just 2 handles and 10 handles off of their highs.  The R4 intraday pivot worked great as resistance at 1224.25.

IMAX and AMGN are standout names to the upside and will be trades that I may focus on if I am going to get long this afternoon.