Tuesday, June 16, 2009

Still undecided

Just a short note. We have many signs of a bearish case falling into place:

- IYR breakout of the channel
- XLF at the edge of breakout
- Dollar having formed a nice head/shoulder after having found strong support as we expected
- oil topping at $73
- Noob index selling off (AAPL)
- coiling/spinning tops resolved to downside yesterday

While all of this looks very bearish - I have no idea where we will head. My first assumption was a run towards the 928-937 range today that would stall. I had placed limit short orders yesterday around those key ranges but removed them just before heading to bed last night.

I honestly do not know where the market will turn. Yesterday could have been a nice fake out as we had very low volume and closed (barely) in the bullish channel/formation.

If we are to see ourselves in a widening pattern here (the coiling from last week) we have more upside to hit the 964 I had mentioned so many times. What really bugs me is that the top from last week does not make sense - it really does not. There is only very weak support for last week being the top and it would really surprise me if this rally goes out with such disappointment. We have not seen crazed short covering, crazed last minute buying or any signs that normally manifest during tops. Additionally there is no time cycle to support this case, nor is there a strong topping pattern. While the spinning tops normally indicate a completion of a trend it should not exceed 2-3 days max and should have been much further away in terms of price from our one month consolidation zone.

Has this market finally played the trick of tricks on me? Making me believe we will go higher so I am stuck waiting for it to go higher to enter my shorts and play the bounce scenarios? I do not know. All I know is that I have no strong beliefs for either direction. Its kind of ironic that I have been so strong on the short side for this entire rally - and now here, when we have quite a few topping signs I shy away from this view.


  1. another thing I forgot to add to yesterday - the reason why I believe it was a fake out - the day should have closed at the lows with a last 15 min sell off to create a new low for the day. This was a classical setup for a stepping day towards the downside with the big gap, attempts at GAP fills that resolved with more selling. Instead we step in and rally into the close on very low volume. There was no "oompf" behind this move, there was no stance for the bears, no commitment in terms of selling - believe it or not, I consider yesterday a very bullish day. It sounds crazy, well it is crazy and will probably haunt me but this is my interpretation.

  2. here is my plan for the day.

    entries 931-936
    Stop at 940

    I will look for proper reversals on the 1min for entries within that range.

    Target for this move is 898 by Thursday. If we break those upper range targets we have an even better short at 945-947 with a tight stop at 949.

  3. bullish reversal around 914 should be there. what do you think Chris?

  4. got quite a few shorts today on my portfolio. Was also short via futures that I just closed out, long now via futures for a hedge. This could go all the way to 908 ... do not think so but has to be considered. so keeping my stop loss on the hedge a bit wider here.

  5. closed out I mean futures. Not new core short positions.

  6. 19 positions, 18 green lol ... its not going to last I can feel it.

  7. a small rally in the making. pos. divg. will add shorts at the end of the day. big down tomoroow

  8. key level for spy close. I think its going to rattle some of the shorts with a 92.43 close.

    Currently hedged via ES long and will reverse positions at close if we get above 92.43 on SPY.

    IF we are down tomorrow, we should see a reversal at 1:30PM-1:45PM and then run to go higher. Will post detailed updated tomorrow again now that I am loaded up =)

  9. 13 more minutes before short covering should start ... or will it be exiting longs this time?