The market gave us an awesome peek into the secret world of the institutional trader today. It’s all about Europe with institutional traders.
Look at what happened on the Russell 2000 and all the major indices as we went into the last hour of trading today: a huge explosion upward. Massive buy side volume hit the market pushing the market up to close at its high.
What caused this massive buying in the last hour of trading? The Financial Times reported that China is looking at buying some of Italy’s debt and investing in some oversold companies that are trading at bargain prices right now.
Institutional traders absolutely loved this news and the market exploded upward. If China denies this rumor or says no to buying some of Italy’s bonds, expect the market to sell off.
Here’s how I’m playing this. I went long the Direxion Daily Small Cap Bull 3X Shares (TNA) right before market close today. I’d like to get a good gap up open and then exit in a day or two for some quick profits.
This bounce today off the lower channel wall of the Bearish Flag patterns means that panic selling is avoided for yet another day. The market bounced off previous support and the gamble in TNA is that it’ll go into a swing move up from here.
I also like the long tail that formed on the candlestick today on the S&P 500. Long tails like this are typical at swing move highs and at swing move lows.
This is a very risky gambit. Keep that lower trend channel wall in view and if the market breaks that support on heavy volume, you’ll need to get out of TNA fast as it’s a 3x leverage play.