The last month has all given us a weird new perspective; a day like today, which had over an 800 point range on the Dow, actually seemed kind of tame and boring.

Looking at the two big e-mini markets gives an interesting bit of perspective. Below is the ES0812 (the December S&P); this morning, it looked like we were going to break to new lows (see the green tint). This was a complete fake-out,since it was actually the absolute best time of the day to go long the market. I'm sure a lot of people had some damage done to their accounts; I sure did (of my four accounts, I only trade futures in one, so the other three were unscathed).

An even larger fake-out was committed by the NASDAQ (NQ), as you can see with the larger green tint below. Unlike the S&P, it was not pushing beneath Friday's lows. Notice on both of these graphs the purple area I've shaded; this, to me, is a topping pattern from which prices might fall away tomorrow. I say "might" because, let's face it, this pattern is only about three days big; it's not like one of our multi-year charts. All the same, I am watching this zone for resistance.

Believe it or not, I've looked at very few charts today, so I need to get to that; I'll probably do another post later on tonight.

I have trimmed many, many of my positions. I am now going long the market. I am buying QLD, SSO, and OIH. I am keeping a decent number of shorts with responsible, tighter stops.

After the market moves in a big way in my direction, I do two things:

1. Take profits on issues which seem to have hit a technical support zone (in the case of shorts, which is the case here);
2. Tighten up stops to take into account recent price action.

When I did my long list of stocks to short on Tuesday, some were shocked at how wide the stops were. But now that we've taken a tumble, I can tighten things up radically, almost to the point where a profit is assured. For example, my original stop on MON was 121.04. Now, just two days later, it is 96.80. So obviously my risk is radically reduced.

As for what stocks to cover, it's tough, because as I've said before, don't underestimate how far things can fall! But there are times when you should simply not be greedy.

The chart above, for instance, shows a price very near its multi-year low and very close to a major fan line. I've covered it. One might even consider buying it! But I'm not going to do so.

Well,. the e-minis have been simply bewildering. There have been bullish breakouts……….which failed. There have been bearish breakdowns……….which reversed. I imagine a lot of accounts are getting ground into hamburger with all this uncertainty. One of my accounts definitely has suffered mightily this morning with all these fake-outs.

The horizontal lines represent what should have been a bullish breakout (in the processing of failing as I am typing this) and, earlier today, an exciting bearish failure (hence recovered). Difficult!

I'd say the next stop is the 2002 bottom.