Tuesday, June 30, 2009


The market really knows how to get us frustrated beyond any acceptable levels. I hold told myself to hold on before shorting as we have a short holiday week. Holiday weeks almost NEVER have a sell off or trend reversal to the downside - quite the opposite, reversal to the upside or bullish trend is very likely. Can this time be different?

I am not sure, looking at the chart here (still the same trendlines) we hit the perfect targets - exact W2 retracement I was looking for - textbook EW and a break of the previous W4 high. XLF and IYR erasing most of yesterdays gains and SPX working hard to do the same.

Chart wise - yes this is what we were expecting - holiday time wise its not. Yet again did the buss leave without me and the market did not give me a chance to get the position I wanted. Last week when we were trading at 880 I told myself that if we are to reach 92X again and possibly 930 I would load up on shorts very large - here we are in this range and I looked for an excuse not to enter when the charts were screaming - short.

Quite a difficult position I find myself in now - we do not chase, so what to do here? Wait for a retracement that may never come? Scale into short now just to be trapped for more upside for the remainder of the week? Sit out and let this go all the way to 900 and below and miss a great position again? - as you can see - we are in quite a predicament here - and I am unsure of how to proceed. Will give it some more time and then figure out what to do. We are still within acceptable levels and a decent risk margin of 12 points (as I am writting this the market keeps on dropping so our risk margin keeps on increasing).


  1. ok guys and girls. This is NOT a bear trap. High for the week should be in. Now its back for me to get the suckers shorts here. Scaling in slowly via puts and SRS/SKF.

    No futures again (largest part of my capital is tied up in futures so I have to take this run again very under invested - though with much lower risk on capital - and of course limited gains).

  2. Thanks for the insight Chris. I know you had stated your target was 930, so I pulled the trigger when it hit.. not even paying attention to the fact that it was a short week. Granted I've been on the side lines last 2 as it was so undecided.

    Question is so where you do see this stopping before the next bounce?

  3. same questions here Chris? I sold my puts (I just wanted to feel good about cashing in the profit -- too wounded a bear) and looking for a bounce to short. At what level is what I am curious about view points. you have been good in EW levels. thanks.

  4. if you got in at 930 ... well, put your stop at break even and walk away. Probably the best possible entry .... ok correction, the best possible entry. Did I say it was the best possible entry? (ok a bit mad at myself here lol)

    Sam, bounce wise its quite difficult to say. We bounced off the W4 low here and should make a move back into the 918-919 range. However, thx for low volume there is little buying power and big selling pressure so we may not see a slow tape grind up here.

    Unless you got in at 930, its very difficult to try to position for a trade here. Any short to take here NEEDS to have a stop at 930 - otherwise you get chopped out.

  5. order ready

    913.50 50%, 915 50% stop 916.25

    917, 919, stop 920

    Long above 918 SPX, short below 918SPX

  6. many sectors are stuck at resistance. We had a break above those resistance levels this week, but reversed back below - something I did not expect.

    So the question we need to answer now - which one was the fake move? Break above (XLF gapped) or break below keeping the long trade valid above 918.

    As I had said this morning, this is not a bear trap, so looking for the best possible entry to take here after the fact.

  7. I got in at 926. July still scares me. I am going to begin with futures soon. Options are very tricky. Take it while it is there. they disappear so fast. IT positions in SDS and SRS still there. aiming at 850-860, which we may see next week, if we are going to 1000 in summer.

  8. Sam, this here is the decision whether or not we make a move to 1014. If we fail by Tuesday next week we are done on the upside. Tuesday next week needs to be above 930 close price with intraday test at 947 either on Monday or Tuesday. Then I am sold on the long side and will go long after pullback to 924.

    If this is the move that is pictured now we will have a swift move down towards 846 (possibly 812) by last week of July, followed by a SLOW grind back towards 895 (6 weeks), for a final drop towards 716-741.

    From there need to re-evaluate ...

  9. previous comment regarding XLF GAP - sorry, was a mistake, was looking at the wrong chart lol

  10. Thanks Chris. from what I hear we are likely to go down significantly next week and then in mid july we may also have significant bounce. In other words it is going to be choppy until fall when it falls big time.

  11. Will post an update for the shorts here soon. Quite a few possibilities here.

  12. ok first target for this move is 904 SPX on the downside if we close at the lows today.

    Daily pivot the same as mentioned above. Bullish above 918, bearish low 918 (daily close prices).

    Use that as a guide for position management.

  13. Thanks Chris. You are right. we should close around 918-917 today for a big day dwon tomorrow.

  14. ok getting tricky here. If we close this above 920 todays reversal has a big chance of being invalidated.