Thursday, December 4, 2008

Look at that range ...

Well I expected a bit of a breather day and we went nuts, huge volume and nice gains. We had overshot my 830 target just a little but due to a fairly large gap open down. I said we will not see 820's again but 830 is the likly bottom - we had 827 5 min after the open.

In addition we had our great short opportunity at the 865 on first attempt, we had hit 864.42 and ran down 30 points - nice gains to be had here. A bit surprised we went this low but considering we had a very large trade range yesterday I guess its to be expected.

On top of that we closed the day again with a break of the previous high - more indication of my call for a sustained rally before all this started.

Well after having reach 873 on the intraday we are only 17 points off the 890. I think we have gone a bit too fast again and are risking re-establishing our 890-900 range. However we have one great advantage this time around compared to last week - during last week as prices continued to increase our volume dropped - this week as prices increase our volume keeps on increasing. An extremely bullish sign - anyone who still believes "well this will sell off, its short lived, we need to short this" needs to re-evaluate at least on the short term what will happen. Long term yes we are headed down another 50% but for now .... go with the flow =)

How to trade?
Again, just as before, 890 and we can go short for an easy 15 points, anything above that again icing on the cake.

Depending on open we have our long chance again - I do not believe we will sell off from here, it may look like it but we could expect to hit the mid 830's on this run down. I would normally expect to hold the 845 but with price swings as drastic as yesterday you need to be ready for whiplash.

All trades carry risk today with the only exception of the 890 short. My recommendation would be to stay on the sidelines today as yesterday had too drastic of a price swing to be telling enough of direction - yes we closed high yet again we traded 110 points on a 50 point intraday range. Those violent swings are not tradable with an in between position, you can only get in on the edge and hope to not get whiplashed.


  1. I enjoy reading your blog. I'm just curious as to how you obtain your resistance and support levels?

  2. Ryan,

    one of the easiest ways is to look at the 5 day intraday chart and plot horizontal lines around the peaks and lows. thats a great starting point until you get more comfortable calling those numbers.

    As you can see many price points keep on repeating themselves. 820, 845, 865. Those are major areas that the market has been trading around for the past 2 weeks.

    Good luck on trading and keep on reading =)