After yesterday’s hard sell off into the close I was expecting some follow through to the downside.  We did have some nice downside momentum this morning through the 108 level of the SPYs but by 11:00AM we were flat for the day and in consolidation mode.  The price action was much different than last time we had a major down move on September 23rd.  On the 24th we peaked in the morning and sold off throughout the day.  This difference in price action had me on alert for a possible break to the upside sometime before the close.  Today, it seemed as though the market was on much more stable footing.

I was on one of the SMB audio calls (the “Mush” call) with some of the traders around 1:30pm and one of our more experienced traders asked if I thought we might see another meltdown into the close.  I said that it was possible but that we were trading in a tight range so it would be easy to play from either side.  At 2PM someone flipped on the buy switch in the market and the SPYs easily traded through the afternoon high.

Because the move started within 10 cents of the day’s high it was easy to get long the market with very little risk and there was some decent upside to the 109.60 level.  The experienced trader who I was chatting with was ready for the break in either direction and got aggressively long when we broke to the upside.  He wasn’t quick to sell as the SPYs had a full point until they reached yesterday’s meltdown price of 109.60.

It was very impressive to hear the type of analysis and trading that occurred on the “Mush” call today.  The two call leaders were focused on a small group of In Play stocks and were ready to strike whether we broke to the upside or the downside.  They were fully immersed in the market discussing each possible scenario as well as the key levels in the various stocks they were trading.  That focus allowed them to get in early and fully capitalize on a buy program that lasted for about 40 minutes.