When trading we watch a stock’s corresponding futures or index. For MON the stock I was trading on the Open, SPY is my corresponding index. Generally when SPY trades higher MON should and when SPY trades lower then MON should follow. I say generally and this was not the case at one very important moment today.
Again MON was very strong. It was above yesterday’s resistance of 74. 74 also was a longer term resistance level. MON was In Play due to its conference yesterday and sharp move from 70-74 into yesterday’s close.
MON was in an intraday uptrend. It found some resistance finally at 76, and then traded down to 75.55. At this 75.55 level there was an important battle. The sellers won and MON headed for lower ground. Those well versed in intraday technical analysis (ME!) expected a move to at least 75, the next intraday support level. In the words of the Rolling Stones,”You can’t always get what you want.”
MON had cracked the important 75.55 level. And then seemingly fortunately for the shorts, the futures and indexes started tanking. Should I have a salad for lunch of maybe some soup? SPY tanked. I am gonna go with the salad. SPY broke the AM support of 110.10. I am gonna get the Big Salad. SPY violated the longer term support of 110 (past resistance becomes support). SPY quickly found 109.80.
And so what happened to our MON? It tanked through 75 right? Not exactly. A buy program was turned on, which I will now name Buy the Tanking Futures Program. 75.41 stuck the bid. What? MON then was pushed through 76. Just another fun program brought to you by HFTs.
Anyway that is their game. This is the same principle as the Buy the New Low Program or Sell the New High Program. The program takes the other side of a trade that has traditionally worked and then forces the short term traders out of their trades laughing all the way to the bank.
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