Thursday, September 24, 2009

What a day ...

Well, some light at the end of the tunnel so it seems. Quite a strong down day yesterday - however, keep in mind, we have only gone down a mere 20 pts off the peak - yes we did so with strong volume again but I continue to remain very cautious.

I had mentioned that I was not going to do any trade yesterday - well, almost, I added some more longer term puts (another 10% to the position), some oct in the money puts, and some short EURUSD. All positions are still small.

So what am I looking for now before I say "lets put some money on the table" - first of course I want to see the 1038-1041 tested. The rally off those levels is what I am really interested in. Lets assume for a moment we get to those targets (very high probability) I am looking for a retest of the 1057-1067 range. That would be my perfect bear confirmation.

I am not sure what to expect for today - could be sideways which will confirm more downside, could be another strong down day which could strengthen the fact that we are starting a real retracement - OR the dreaded scenario of dip buyers rushing in on low volume by exceeding 1067. As you remember I had talked about the 1062 levels a few days ago - yes they were breached yesterday but bulls can easily take this level back - could have been panic selling and sense will kick back in. Do not think that is the case - but as you can see, I am overly cautious here. I am short and will continue to stay short and manage my positions but not going to bet the farm on it =)


  1. another note - as you know I have been shorting very actively on any new high we had reached in the past with quite a wide margin of "error" (stop). This had been the first new high I had held back on - could it be? I am finally remaining on the sidelines ...

    Also, as posted in the comments from me yesterday, I am 51% sold on the idea that the bear market is over at least for a while ....

    We just broke down again on futures here, and are inches away from finally breaking the 1051 on ES. I am tempted to add a small short here and avg down if we go higher to 1062.

  2. I think we bounce here to atleast 1055-1060 then test 1040. what is your take here?

  3. not sure to be honest, as always the market does not play my perfect scenarios ever. I had mentioned the importance of 1067 - HOD is 1066.29.

    I still think we go lower first before trying that range again, though I believe if we head to 1040 first now, we will not see 1067 again and may stop at 1062 best case if we rally off those levels.

    Probabilities are highest to close towards the lows of the day. Just not sure if the LOD was already made.

  4. I would not expect any big rally here, or even a rally back above 1054. Chances are we remain range bound here as we had been since 10:30.

  5. this should be it here with the upside for the day. Should close below this level here - otherwise have to go back to the drawing board.