Unequivocally Wrong

So much for any idea of where the market is going. Today could be the oft hoped for 'false break out and failure to big drops'.
More later, perhaps with a new format.

Ok, more than a little early

But I'd suggest still right...
The market clearly got significantly past where I expected it to turn down, and in the face of clear deterioration in economic reality and likely path.

Still, I'd have been better off having waited. Looking at the mid-term picture, its clear to me that we're still in the range of resistance and congestion and I'm still expecting 880 in the near term (1 month or so) and 810 perhaps by the end of the quarter.

The risk is that I'm wrong on this mid-term outlook and the market could get to 1000 on the SPX. That would hurt my bearish portfolio...


Looking at the shorter term picture, it's likely we'll have a stop at 910 before the 880 goal short term. And 930 is a key point to break to confirm my bearish thesis.

Shorted, a little early perhaps

I went long the double short ETF's mid-afternoon yesterday, kind of jumping the gun. One of my unspoken rules is to wait till the end of the day on trending days (like yesterday clearly was from the beginning) to trade.... The best times I find for mid-term trend changes are early and late in the trading day. That's when most mid-term peaks and bottoms happen...

So, expecting the market to either form a range or resume defining the downtrend, either way not expecting a rally to new 2009 highs. If that does happen, I'd expect it to be a fake-out and to fail quickly, though again not expecting it.

Just to be clear, I prefer to trade for 1+ month outlooks, not this quick fire stuff that I've been doing. But I don't dictate the timing of opportunities and take them as Mr. Market gives them. Paradoxically, the recent trends have been well worth trading even while the VIX is hitting new lows from since the LEH fiasco.

So, as I might've mentioned a month or so ago, I feel the market is done with the big move off the bottom, and will resume a downtrend. My recent bullish trade was a opportunity to profit from a short term reversion in what will be a bear leg and expecting ~810 to be in the cards this quarter or so.

Simultaniously Right and Wrong, Again....

So much for defining the new downtrend with a lower top at 910-920.... Yesterday's strength takes us back to the drawing board. So, I was wrong about the rally's stall point but right about my trades: I was looking for a reason to exit the long side and yesterday's huge volume and rising vix on a strong market along with my expectations of resistance were good enough to take profits.

Yesterday's rally blew right past that level, and in my opinion raises the odds that we're going to see a range bound sideways market for a little while, which would be a great trading opportunity.

I don't expect the market to break into new 2009 highs and am looking to today's action to indicate whether we have a range trade or a re-defining of the downtrend.

Fyi, sold my double long etf's at the close yesterday, waiting for a clearer picture to go short.

Looking to sell and short

The market will probably get to 910 this week and quite possibly this morning. If so, I'll be selling my double long etf's and looking to buy double short etf's on further rallies and as the downtrend continues to define itself.

Quietly noisy

The danger in using a range like the one proceeding the March rally, the period in October btwn 1000 and 840 and back, is that it is a reflex move and not indicative of anything other than a market trying to find itself...
In direct contrast of that would be a period like we the last three days, where the market moved much more intraday than daily - lots of noise, but the signal is flat.

Anyway, back to guesswork. The support at 880 simultaneously failed and succeeded. Intraday, we hit the aforementioned 870 which I also stated I would view as a failure of support at 880 and a call for 845. Nonetheless, the 880 range held strongly at each close, so I'm still waiting for a move to the next lower top in the new downtrend, around 910.

Fyi, went long those ultra etf's on Wed at 12:30ish.

Back InThe Saddle

(click to enlarge)

Hope you had a good Fourth holiday, and it looks like the market is back to making some moves.

It looks like I'm going to get that bounce at support at 880, which I've been waiting the SP500 to get down to for a while.

In addition, the most recent peak at 930 looks like that possible lower top I've been waiting for and the beginnings of the new downtrend.

I'm looking for confirmation of a new downtrend in this next bounce, which I'd expect to get to 910-920 sometime soon.

On the flip-side, if 880 fails (ie we get to 870) then we're looking at to the next area of congestion, at ~845. That would be interesting and call for a review of the nascent downtrend. That would raise the possibility that this first drop is going to be like the first rise in March, at a quicker than trend pace before the real mid-term trend is defined.

Fyi, sold 75% of my double short ETF's at close yest, haven't gone long yet, in cash.