Thursday, June 25, 2009

Short Update

What a close - pinned right at 900 to make sure we get a close in key bull range. My plan at the moment is still to reload shorts this week - I started with small positions yesterday morning with the anticipation of adding more today. In a way I was hoping for higher prices to be able to get a short with less risk but it seems the market will not allow anyone to get the entry they are looking for - bulls or bears alike.

Sam, I know many are going back and forth with EW's here - many different counts all with different scenarios. As you may remember I have my reservations with EW - I like using them for confirmations BUT there is always a count for something, bull or bear - so treat any counts with care here. Range bound markets like to screw up counts and give you the "ability" to create counts for either side.

At this point caution is still needed. I am quite "frustrated" with the dollar here - keeps on back and forth without any more and pressured by 2 trend lines. Which one will win? No idea quite yet.

I am really liking what the monthly chart is setting up for - the upside is pinned at 924 SPX and the close at 900 leads me to believe that we will try to continue in a narrow range here until the end of the month with a close anywhere from 900-924. If we can manage to stay above 900 here for the month it would be a perfect setup for 2 strong monthly down bars. As a result I am going to continue to use the next few days to build up my IT shorts. This time without closing them after 30 points (heh). I am still not quite ready on the futures side and continue to use futures to scalp and swing trade to offset any pain I have to endure if we go higher.

For the bulls - we need to try to stay above the 895 SPX cash levels, a break below 900 off the open will require a reversal within 2 hours with a low of 895. A breach of this level will trigger selling and bulls may give up the fight to become dip buyers at the 875 levels.

For the bears - easiest position to be in at the moment. Any rally above 900 is a great place to enter shorts with a 24 point risk exposure. Great play would be - buy SPY/SSO at a break of 900 (stop 895) and continue adding shorts as it rallies. If you get 920 prices close out the hedge and add the last chunk to your shorts.

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