Wednesday, April 1, 2009

What to do from here?

Yesterday
Quite a day yesterday. We have inched up very very slowly towards the 800 range, very little volume and I had mentioned in the comments that this type of trade action should take us higher then 804. Unforuntately I was stopped out of my shorts here as I was afraid of another leg up towards the 816 range where I was looking for a better entry.

As you know one of my trade rules again is no new positions after 3:00, I have been beat too many times in the last hour whipsaw action so I had to stand on the sidelines as we continued dropping even in the after hours action. Futures wise we are already below yesterdays low of 792.

Volume wise was quite strong yesterday - strongest day in the past 3 days which has to say something - while we closed 10 points up its a very bearish close here and of course leading us lower in the short term.

Today
We should continue to retrace towards our major targets. I had mentioned yesterday the next stop is at the 769-771 range here. We have broken 792 in the after hours so I would "hope" to get a retracement back towards this range as resistance for another attempt at the short side.

The next few days are going to be important as they will give us signs for the next move to come, either finsih a required retracement to make new highs, or move towards the 709-716 which hold a lot of support. I had mentioned in the past that a break here will resume the primary bearish trend - I would even be inclined to say a test at this range is enough confirmation for me that we are moving lower. However, the signs are not yet in and we need to be careful of this being a retracement to make new highs in the 838/848 range.

So from a long term position perspective, wait for 709-716 before going in very heavy on the short side, in the short and mid term keep your overnight exposure minimal and try to stay light.

I will provide more updates after the first 15-min on the open so I can give more precise guidance on trade ranges and scenarios. Pre-Market data can be tricky at times and are not always reliable of the day to come so I normally do not involve them but they are quite important here as an important point was broken after the close yesterday (792).

20 comments:

  1. as an FYI, there have been some questions regarding MACD (as you know my primary indicator). I will try to write something up this weekend in regards to that to make it a bit clearer why I prefer this indicator over many others.

    Also, more indecision in after hours, we MAY get lucky and get a 800 test out of this but we have to be careful. 792 is a great short entry but may not be the best depending on what we are doing and how we are opening. So be careful. I feel very strong that the move for the next few days are down and see a change of trend on Monday. I will reconfirm at the end of the day but a change there is very likly.

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  2. That's fantastic! :) Thank you for the early market insight. Looking forward to the weekend MACD write up. I for one will benefit greatly from it.

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  3. well looks like we may hold from here and get back to the 792. Keep in mind that would represent a partial gap fill as well. Considering we had such a sell off yesterday in the afternoon we are not seeing the proper continuation, so shorting into this will carry more risk. Best again to stay out and wait for better chances unless we can create a tradeable range from here.

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  4. not done yet on the upside. I think we have a bit more to go higher, possibly 800.

    Crazy markets ...

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  5. X-trend blog, which has been bearish for long now seems to be neutral or expecting higher move before going short again. They covered the short. all are afraid of M2M news tomoorw. Shouldn't this be priced in by now?

    What do you think Chaugner? again expect the unexpected?

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  6. At this point it is really difficult to make predictions. As you can see from my forecasts I have held back a little bit on my mid and long term calls as we are in a "gray area" at the moment, meaning we have not yet made a clear enough decision, one thing we can say for sure we will have a nice range to follow once the decision is made. Remember back in Jan all this bouncing between 800 and 850? That lasted a while and we are currently in that same type of mode, one thing we can take from this for sure - 4-5 weeks from now we will have made it probably 60+ points away from the 800 - up or down.

    The other thing about this "priced in" - you can see I barely ever refer to this statement, because quite frankly its not really true. Its a great argument to support a bearish or bullish case when it occurs but its never a constant.

    I am staying light at the moment and as you can see I advised it as well - better to wait it out a bit and wait for a clear trend before making a move. The long term trend is bearish and will remain bearish for many months (I feel years) to come, short term trend is sideways, mid term trend has a high probability of being bullish even if short term it turns bearish - it sounds very confusing but when you look at it from a bigger picture perspective it makes a bit more sense.

    As we have 3 distinct trends based on the 3 time windows, its impossible to try to figure out what will happen because it will only be a guess with very low probability of occurance. Of course you could outline every differnet scenario with confirmation signs but those change almost daily now.

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  7. watch for 811-813.50 for this rally to end.

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  8. think this might present an opportunity for a short at 813?

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  9. though its only a 60% probability that it will break down so keep it small.

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  10. I think you are right on the money

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  11. where do you think bulls will come back at -- 798 or 792?

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  12. its very possible to get to 798, if it is, I am staying short with half my position. Already exited some, waiting to exit the other 25% now, looking more like another push to the downside.

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  13. take a look at the 1 min bar yesterday, looking like an exact repeat.

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  14. stop out, after the position went the way I wanted to I moved stops and they just got hit. Crazy market, kind of frustrating to only lock in 30% of what I had open but a winner is a winner.

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  15. looks like it going to shoot up. I covered my short for break even

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  16. bulls dont seem to be giving up without a fight

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  17. high of the day 813.62 - Guess I was off by .12 cents hah

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  18. good call thanks for your help. let us see what M2M brings tomorrow.

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