I am being SQUEEZED!!!! by the ES

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Far from an expert on this and if anyone wants to correct me then I'm definately all ears, but wouldn't a whole lot of shorts mean there's just as much risk of a blow out to the upside with all those shorts covering??

Quote from AMT4SWA:

Here is the current unique situation for the ES from an open interest stand point, since supply & demand rules the markets. Right now we have the ES all the way back to previous highs (1224's area) but there is still a TON of ES SHORT inventory being held by large liquidity participants. Actually, I have not seen this much held SHORT inventory resting off a new high since November 2007.

http://www.charthub.com/images/2010/12/04/ES_HTF_Chart.png

I myself did initiate a longer term SHORT trade in the ES late Thursday with the ES trading back to the 1220's area (knowing how much SHORT inventory was still being held in ES - significant inventory resistance). Also, I did not mind working the SHORT trade into Thurday night AH session action ahead of Employment situation #'s (not like everyone is suddenly hiring again....LOL!).

When employment #'s hit I cashed out most of the trade with the sell off from news release and was left only holding 3 runners. If the market Sunday night into Monday trades above the 1227.00 level I will be willing to go back into an active ES longer term SHORT trade again (since there is a TON of SHORT inventory still being held).

Here is the MAIN thing to watch into Monday's US cash session.....will "Equities" continue to run BUY program runs throughout the day (like if the Euro rallies hard again) causing more of the held ES SHORT position to unwind (BUYING to cover.....up we go in ES). Monday I will be watching the "Equities" like a hawk, if I am back to an active ES longer term trade with any trading at 1227's or higher. If I see the massive ES held SHORT inventory degrade (unwind) throughout the day, reacting to "Equities" BUY program activity, then I will shift to a defensive mode while running my active longer term trade (if we are trading at 1227's or higher).

Here is the unique situation we have, with all this held SHORT inventory in the ES there is a LOT of fuel for a mean SHORT COVERING rally ahead (10 to 15 point range extension minimum in only one trade day). I would say to be vigilant and keep your eye on the US cash session Equities BUY / SELL program activity for "the TELL" Monday. After the trade day on Monday, I will review the ES held inventory situation and give you an update as to what I see for Tuesday.


BTW, here was the supply & demand events that kept the market from selling off below the 1170's prior to this rally back to new highs (tracking open interest gives the hints);

http://www.charthub.com/images/2010/12/04/ES_HTF_Chart_2.png
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Quote from maninjapan:

Far from an expert on this and if anyone wants to correct me then I'm definately all ears, but wouldn't a whole lot of shorts mean there's just as much risk of a blow out to the upside with all those shorts covering??
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Read what I said.....that was covered specifically;


"Here is the unique situation we have, with all this held SHORT inventory in the ES there is a LOT of fuel for a mean SHORT COVERING rally ahead (10 to 15 point range extension minimum in only one trade day). I would say to be vigilant and keep your eye on the US cash session Equities BUY / SELL program activity for "the TELL" Monday. After the trade day on Monday, I will review the ES held inventory situation and give you an update as to what I see for Tuesday."


Also, for the 3 ES I am still holding (1224's cost basis)....1210.75 is my first target (last 2 ES I will hold as runners). Euro selling off so far tonight helping to pull down CL and ES (covered my last Euro SHORT mentioned before at 1.3301).
 
Quote from maninjapan:

Apologies, should have read it a bit more closely. Thanks though!!!
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Hey, you brought up an excellent point so I wanted to make sure you saw what I said about that possibility. Some of the strongest most linear movements of price action is almost always fueled by covering action in the order flow (SHORT covering rallies or LONG covering sell offs from significant "market order" driven order flow).
 
Yep, in fact a nice intraday trendline down complete with lower highs and shallow corrections. Oil and the dollar index are cooperating.
 
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