The bears have been ripped to shreds since last Wednesday’s bottom and have been no where to be found since then. However, despite the huge bounce, there hasn’t been any significant repairs to the charts and the V-Shape bounce lingers an overdone dead cat bounce.
With that said, I don’t recommend getting heavily short here. If you want a starter position to counter some of the existing longs you have, then so be it, that’s not a bad idea. But slowly dip your toes in the water here if your desire is to get short.
As for me, I actually wouldn’t mind seeing another downturn emerge here. The trade setups are amazing to the short side as you will see from the short setups below. (more…)
Way back on August 30, I did a post called Past Fear, Present Fear, which offered up an analog of the VIX (please read it if you don’t remember; it’s a pretty good post). I would daresay it was one of the best posts I did in 2014, and things certainly unfolded as I hoped they would (although today was no fun for me). I followed up on October 9th with my Moment of Truth post, which was just before the markets started really falling hard. Thus – so far, so good. (more…)
Well for me, Tuesday stunk, Wednesday was great, and today mega-stunk. At least I’m not short Apple, which has hit its highest level in history and, even at these levels, is sporting a really strong pattern breakout.
With oil pushing higher (finally), DBC seems to be getting some strength and, as cheap as it looks, appears like a good buy. I’m not so sure. Just take a look at each of those little red lines I’ve drawn. In each case, one could have argued that commodities were forming a base and were ready to reverse, and each time, the tumble simply resumed. The modest pause we’ve seen in prices plunging isn’t a justification to fight the overall trend.
At the point where SPX broke hard through the 50% fib retrace the overall trend shifted from bear to unknown in my mind, and it’s still in unknown territory now. I’m not assuming that this will resolve in either direction until I see some stronger evidence, but I’ll be calling the shorter term likely moves, which at the moment look a decent fit with either bull or bear overall trend.
Looking at the pattern setup at the close yesterday, and the recovery overnight, I have a new educated guess for the direction on SPX over the next few days. I’ll lay that down here and we’ll see how that goes. (more…)