Thursday, May 21, 2009

Reversal day

High volume, strong price move, MACD stays negative. Being a bear I was hoping for a close right at 912 (maybe a bit below). A close below 912 was wishful thinking. A close below 907 RIGHT at 903 (you remember the importance) is significant.

Lets see how it plays out. Futures are down a bit but we have jobs data this morning so we have to see how the market reacts to this. UK outlook lowered, Fed outlook lowered. Its quite negative around us now.

From a bearish side, we either get our sell trigger today which would lead to sell off right off the open or an orderly decline that should retrace back towards the low 900 range not to exceed 912. Just like in the past if the market comes in with strength it needs to move to 880, possibly lower, to add enough buffer to keep any retracement below 900 and stall just like before at the 898. The first 30 minutes will tell the story for scenarios today.

On the bullish side - well, I have problems seeing how we can maintain the uptrend here. However we are still in the channel (barely) and need to make a move now to the upside, so the bulls have the first 30 minutes to make their move here.


  1. samalamadingdongMay 21, 2009 at 9:15 AM

    see that trend line from march is right around 890-91. should provide some initial support.

  2. yeah, however we have a lot of pressure now that we have this large GAP down here. It is very possible (not probable) that the open is the high of the day (or 1-2 pts off).

  3. Chris, how do you feel now? hols shorts? hedge against bull? or take profit?


  4. I was just asking myself the same question ... still looking for a sensible answer here.

  5. I am hedged now at 60% (meaning I loose only 40% as we go up). Its a bit of an odd day thus far in terms of sector plays. Financials are quite strong here [raises eye brow].

    I am holding my core shorts as is at this point. While the market has damaged me in terms of teaching me to take profits sooner, I am still a strong believer of a correction on the short term, even if this is a leg to go to 1000 on S&P.

    Willing to pay for me to be wrong here.

  6. I got into energy yesterday and it looks like a bad move. Do you see this is as a pullback and I should avg down? But I think if we tank from here, it's going to take energy with it.

  7. when looking at specific sectors and stocks in general. During bear markets they will correlate very heavily to index. This is due to risk and capital management of overall funds and positions. Its not a rule but a generalization.

    During bull markets this is not as drastic and many stocks and indexes traded based on their fundamentals regardless of direction of the overall index.

    Energy is a strong index on its own that by itself has enough divergence from the overall index - however, energy has another very influencing factor - the dollar. So for me to try to navigate through dollar/S&P500 to make the right pick in the energy sector is quite hard. We are in a bear market, and dollar has pressures from all sides with many world wide influences.

    Regarding overall market direction. At this point I am looking at this next move here into the low 800's as a primary direction for my positions and will manage accordingly.

    I owe you all a long term update so we can try to figure out where we will go after this is done. Considering we have a long weekend I may get myself to finally finish that post =)

  8. This market is EXTREMELY hard to trade and navigate through at the moment. Just take a look at all the blogs and other traders. I dare you to name me one that has done well in terms of calls and actual trades in the past 2-3 months.

    So if its difficult for a pro - what makes us think we can beat the odds and come out as a winner. I am still finding myself on the loosing side here. Caution on every aspect and angle, extreme micromanagement of positions, extreme care on risk and capital management.

    I have to admit I am very overwhelmed with the amount of precision I have to approach the market here, and still not to come out on the winning side is rather frustrating.

  9. ok market should make a decision here in the next 15-20 minutes on direction. Either go back into the low 890 range (893 to be precise) or break the current low of the day. We will know shortly.

  10. I favor the break to the upside by the way.

  11. new post based on what I am seeing here ...