Friday, November 28, 2008

Gobble Gobble

Previous Day
Well yet again we are moving as expected. I had called for a 50+ move day, we had 46. Of course the ever so important break of the 865 - as mentioned my expectation was a break of this range once we reached it. There was a bit more hesitation due to the Long weekend ahead of us yet the bulls stepped in and broke with confidence. Closing in the upper range will definitly give us the possibility for the 900.

Unfortunately our gap down in the morning made the long side quite a bit more difficult. Here I said that the trade will become very difficult - you could see that based on the hesitation at the 865 after the market had to rally off the lows - created too much of an overbought condition once we reached the 865.

Short day, people on vacation, and a weekend ahead. My call would be a sideways day today with a small trade range, we have the possibility of touching the 900 - if that is to occur any longs should close out.

How to trade this?
If you are long off my recommendation today is close day. We are right at the 20 day moving average that currently represents 890 - here is where I feel we will top out - do not be fooled by a break and reaching 900, this is not a confirmation but a fake breakout that will reverse.

I expect a change of trend to the downside on Monday. As mentioned if we do get to the 900 today the change of trend can occur here but we should remain above our 865 key range. There may be a chance here to stay short over the weekend and carry the risk that can bring you great rewards - my recommendation - wait till Monday and miss out on the 20-30 points and find a short entry from there.

The next cycle on the downside should resolve itself by December 3rd and find a bottom at the 820 range. As we will continue on the upside and hit the 970-980 eventually we can savely average down from here starting at the 845, next at 830 and final position at 820.

Of course I will post more details for the daily trades but including a bit more short term details so you can understand how to position yourself better.

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