Tuesday, November 25, 2008

Smack da bear in ze face

Well, understandibly I am gloating quite a bit. I am pretty stocked that my predictions for yesterday were dead on the money - probably my most accurate day thus far in terms of price, action and time.

I had entered a long position on Friday just before the close that I closed out yesterday in the morning - I did not listen to my own advise. Thats pretty sad.

Either way lets get to yesterdays review. We had our gap open and sold off back into the 807 range. I said that if we are to get to 806 its very safe to go long. The hesitation at the 845 range was clearly visible with consequitive tests - I hinted at this being a possible short, the only short but only if we lack momentum and as you could see here we were unable to short this run down. However, a short like this can be protected easily as you have no losses with another retest incoming. Having formed an ascending triangle it was very clear we would break the 845 - those are the type of scenarios we have to watch. Volume was just a tad above average, I would have liked to have seen some more but I take what I can get.

To top of the day we closed right at my prediction above the 850 with 851 close price on top of the range - as you know me I normally do not post close prices but for a day like yesterday it was very important to close a bit above our KEY resistance of 845. We had 4 days below the big october triangle and now are back above it. This is a very bullish sign.

We went a little too fast too soon. Today I would expect a bit of a breather, if we are to get a breather or a slight down day we are setting up for a run up to 960, if we try to continue to rally today we will have a change of trend either today or tomorrow at the 900/910 range.

How to trade this?
ok today is going to be a bit more difficult. We have many non-believers out there, you could see this clearly in the last hour yesterday with huge positions being liquidated. FYI shorting is allowed again today but only with care - the trend is your friend and its currently up.

If we get our slight down day today this is a great chance to try to go long, however, it is very difficult entering a save position here. The entry range for a long is anywhere from 845/830/820. As you can see there is little protection you have today to go long. Watch momentum carefully once we get to those numbers so you can see if we will overshoot. Of course perfect entry being 820 but it is my guess we will only see the 830 today.

If we get a rally in the morning hours to reattempt yesterdays upside of course expect it to sell off, 845 seems the way to go for a long. Again, a bit more careful here today. Yesterday was an easy day to trade, today will be much more difficult and you have to be ready to assume more risk with the same reward.

On the short side of course we have a great way to trade retracements especially if we are to reattempt the upside of yesterday. Keep in mind those trades are only for retracements, so get out as soon as you get your 10 point gain. This is not a long term short position.

Shorts represent the least risk today as we will continue to attempt the upside ranges giving you a chance to get our at no loss, however your gains are very limited. Longs are very risky today but could pay out very well if you are to hold for maybe 2-3 days.

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