Yesterday
Well there was no looking back after we gap opened yesterday and we continued our decline and had our first 699 number on the S&P. We hit my targets at the 704-707 range but failed any attempts at a rally. I did go long here yesterday and stopped out with half my position at the 702 range but kept the other 50%.
While we had large sell volume I was surprised to see quite a bit of larger buying into this weakness. Ultimately we closed very bearish but those large buys yesterday in the afternoon made me feel a little better. Especially the buy transactions into the close made me a bit more confident about holding my position, something I normally do not do.
Today
We talked about round numbers on the market and it is my feel that we will hold this range here. We should be seeing more of the 700 before we get into the 6XX range. I made a special post yesterday that I had prepared over the weekend taking many of my long term calls and applying what we have learned to our long term views. It is the first time I am trying to be this precise on a long term perspective but I believe strongly into what I posted yesterday.
The market is getting ahead of itself a little here, we accelerated after the break of the 800 but should now find a holding point at least on the short term. This holding will most likly be visible as sideways action with little attempts on the upside but also hesitation to break lower.
I do not think we will break into the 600's this week, if we do we will see the mid 600 range targets fairly fast and it would confirm the acceleration towards the downside I was talking about - again something I do not feel will occur. We went from 800/7800 as major support and dropped 100/1000 points, keep in mind those ranges now are quite a bit more percentage wise as it used to be when we traded in the upper ranges.
How to trade this?
Unless you have a position I would stay out of the markets at this point. If we do have a chance at the 741 this week of course we can take this as a short but I doubt we will see this. My best bet would be trading towards the 736 range by sometime mid week.
Thank you for this. Im just about to read your special post from yesterday. Appreciate you doing it. Also hoping to see more of the 700 this week.
ReplyDeletewe have created and expanding channel towards the downside and continue to bounce between those ranges. A decision here is very likly in the next 15-30 minutes so watch the breakout carefully.
ReplyDeleteif we break down we will see the 600 for a short time (max of 2-3 hours) before getting back above the 700 range. You may remember the 5 bar 15-min pattern - we are currently setting up for this, 3 bars already created with the 4th bar now in play - if the pattern completes we will break yesterdays low but recover in the afternoon.
ReplyDeletewell there is the breakout perfectly on time =)
ReplyDeleteHow low can it go today?
ReplyDeletenot much lower then this. At best 4-5 points from here. I do not think we are done yet, there is a bit more to drop first but I do not think we will see 68X's today, maybe overshoot by a bit but not lower. If we are going lower today and are NOT able to get back above the 700 range we are going to be in for some rough times with our primary low of the year target coming a lot sooner. I had warned about this a while ago and I am more hopefel then anything that we can maintain some sense here. Looking at VIX we are on the edge of another market breakdown - again I do not think it will occur but we have all know we want to be ready so it does not hit us by surprise.
ReplyDeleteI am itching for some longs right now. Am I crazy?
ReplyDeletenope you are not. I am in the same boat, but got to have some patience, we are not done yet on the downside and you all know how much I like perfect well protected entries =) ... made many mistakes in the past chasing trades and being impatient. It either happens or it does not and here we have to wait a bit longer. Time wise I would probably be looking for a potential long entry at the 12:15 @ 689-691 with stop loss at 686.
ReplyDeleteOne of the major things to look for is buying of large orders into the weakness, I saw that yesterday towards the afternoon as we continued dropping but large buy orders coming in. We are nopt seeing those quite yet. Too much panic selling going on still but those are the signs I am looking for at the moment.
ReplyDeletedingdong, I see you cheating on my blog =) ... lol
ReplyDeletePatrick knows his stuff very well (gannfan) so its all good =) I post there a bit here and there too under Chris H. Maybe have seen me around. He definitly has quite a bit more experience then I do =)
yep. I'm a "early-stage" student to indeces and I follow your blog and Partick's blog religiously. I got into individual stocks as a hobby 2 or 3 years back, with all my losses, I've switched over to indeces (still as a hobby).
ReplyDeleteSometimes I think this stuff should just be left to the pros.
...."Sometimes I think this stuff should just be left to the pros"....i know that feeling dingdong. Im going through that individual stocks as a hobby thing myself and with the pain of the losses suffered...but im using it as a lesson in my education of the markets...as a wise investor master once told his young Grasshopper student, learn from your mistakes and treat them as education ;) apologies for the david carradine kung-fu pun...just trying to keep a sense of humour in a difficult time. Good luck all.
ReplyDeletemy best trades, and the ones I benefited from most were my loosers, especially the bigger ones. It sounds wrong but thats how it is. Its the cost for education as you said, others buy books, go to classes, etc, we loose money to learn. If you had a business its the cost of opportunity, you are not closing every sale you pitch, but if you close more then you loose, you are making money. This is not some BS argument to justify losses but if you can take your loosers, analyse them and learn from them you are on the right path.
ReplyDeletewent below 700 for first time at 11:06, did a test at noon, then broke through strong at 2:00 lol, 2 hours and 54 minutes - 6 minutes off. Market just walked away with a black eye from a knife fight. Got to make sure we can hold on to those gains in the last hour.
ReplyDeleteI closed my long off the 693, that covered my stop losses from yesterday and today so makes me feel a little better.