Jul 022012

CL 08 12 (1 Min) 07.02.12

7/2/2012 Monthly ISM Manufacturing PMI (0400 HI time / 1000 EDT)
Forecast: 52.1
Actual: 49.7
Previous revision: n/a
Started @ 83.26
1st Peak @ 82.91 – 0402 (2 min)
35 ticks

Reversal to 83.13 – 0405 (5 min)
22 ticks

Notes: Report moderately fell short of the forecast and came in below the threshold of 50 indicating contraction for the first time in 3 years. This caused a 35 tick short spike that did not have to cross any SMAs or Pivots to peak at 82.91. It then rebounded for 22 ticks on the :05 bar and was likely gearing up for a 2nd peak short when news out of Iran broke about a threat to close of the Strait of Hormuz. This caused the dramatic long :07 bar and follow on volatility. This is why you always use stop losses when trading 2nd peaks and reversals, because some news event can always throw the current conditions out of the window and ruin your trade.