Harder and Longer

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In my video from just a couple of days ago, I made a couple of points:

+ There were a lot of interesting set-ups, but they were too battered in price to make the risk worthwhile;

+ I had covered a variety of positions at a profit simply because it wouldn't take much buying to wipe out their profits

Well, both of the above points were absolutely right. Take a look, for instance, at DLLR. Today alone, it climbed almost 27% (and it wasn't from a buyout; they simply had good earnings). Looking at the chart now, it is a gorgeous short. But imagine stomaching a rise like today's with a position like that!

I'm getting a leg up on my chart reading, and I've done A, B, C, and D already. From that list, I've got 45 short candidates and 9 long candidates. I suspect this ratio will be roughly the same once I'm done with the whole alphabet. Certainly there are a lot more delicious-looking shorts now than there were yesterday.

But the longer the S&P bangs against 1040 and lifts higher, the harder that support is going to become. That's a two-edged sword, however. At the moment, this level is a bull's best buddy. It is the line that "guarantees" a safe buy point.

But if…….and I emphasize if……..that line is plainly violated, 1040 will be as formidable a resistance level as it is now a support level. If we get into the magenta level, shown below, there's still a chance 1040 could be beaten, just as it was early in July. If we get down into the yellow, the bulls are going to be freaking out, because no one is riding to the rescue. And if we get into that green tint – – as God is my witness – – I am covering all my positions, as this is my long-intended target.

0827-spx

As I've mentioned, there are some calling for a drop between 875 and 900 (including no other than Goldman Sachs). Perhaps. But I've set a very specific goal for myself, and I have no intention of getting greedy.

Anyway, this was a good week until today, and I felt the need for one more post. I'm done now. See you Saturday sometime.

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