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Sell programs felt today

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After a higher open for stocks this morning, it may be interesting to note that commentary from earlier this morning regarding a rather mixed Treasury market and some modest selling in the 5-year maturity, but buying in the 10 and 30-year maturities had us looking for "a bit of a pullback from the higher open."

That's almost "exactly" what the markets have given traders from the get go. Also interesting is our mentioning in more detail some buy/sell program action from yesterday. In today's market monitor, this morning I couldn't keep up with some of the "sell program" levels being triggered.

I'm going to try and "illustrate" this as it relates to the "premium" which many subscribers that have q-charts have followed this morning. The q-charts "symbol" form premium is $PREM. Other trading software may have a different symbol and subscribers can contact their appropriate support services to find out what the symbol is for the S&P futures premium.

Premium of S&P 500 futures (front month) - 1-minute intervals

The "key" daily levels which we give each morning is the HL Camp & Company "sell" and "buy" program levels. The 1-minute interval (shown for impact) had our first "sell program" being triggered at 09:43:00 EST. Over the next hour, several other sell programs were triggered.

Dow Industrials Chart - 1-minute interval

This morning's action was interesting to say the least. Several sell programs were generated and my q-charts kept getting triggered at my $-1.82 $PREM alert I had set. I also have an "upside" alert set at the $2.16 level, but after the open of trading, that "buy program" level hasn't been triggered.

Watch those Treasury YIELDS if you're a short-term trader today. If they start edging up like (they have been in the past hour) we could see some "buy programs" start to be generated.

Now, don't think you "have" to trade the buy/sell program strategies in order to make money in the market. I'm simply showing this to subscribers so they get an understanding of how the computer generated buy/sell programs can impact markets on a daily basis.

What can actually drive these programs is what takes place in the currency and Treasury markets. While we didn't "know" that several sell programs were going to hit just after the open, perhaps our observation of rather mixed Treasury markets was "hint" enough that some program selling action was actually going to be in place, which would have stocks pulling back from their open!

There's nothing that says a trader trading the scenario for a "pullback at the open" couldn't have gotten some confirmation for that scenario when his/her trading software started flashing alerts at the "program trading sell level" of $-1.82 and give them some confidence to perhaps initiate a bearish trade.

As mentioned in today's 11:00 update at OptionInvestor.com, a trader could even look at a stock they are currently holding bullish or bearish, measure the various sell programs against, and see if one of your stocks may be "subject" to some type of institutional-based buy/sell program.

Jeff Bailey
Senior Market Technician
Option Investor

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