Wow, a third good day in a row. This is terrific. I am recapturing a huge amount of lost ground from the past few months in very short order.
My main takeaway from the /ES is that we're trapped between two areas: overhead resistance is everything about 925 (the green tint). This is where the bulls have tried – and repeatedly failed – to really get the market rocking higher; and then there's the area below 875, tinted in magenta, which has represented firm support for the past couple of months. It's conceivable we could be grinding around in this little 50-point range for a while.
Take note also how we've lapsed into the next-lower Fibonacci Fan zone. The rate of change is seriously starting to slow down. The easy money for the bulls is now a March/April memory.
I've been talking a lot lately about switching more fully to the bearish camp, but what did that actually mean? Well, specifically, and in no particular order:
- I threw almost all my "lottery longs" under the bus. It's all well and good to make 50-100% on crappy stocks, but let's face it, not that many people are buying scented candles and authentic African drums at Pier One these days.
- I got rid of pretty much all my long equity positions in my other accounts.
- I greatly increased the quantity of my short positions, as I found many terrific-looking short opportunities.
- Most indicative of all, I started trading the /ES again. I'm pretty rusty, since it's been many weeks since I've dared touch an e-mini. But I've done two trades during the past two days (20 contracts each; one time long, for 3 points, and one time short, for 6) and they've both been nicely profitable.
Funny enough, I've got two huge long positions in DBA (different accounts). I'm a little conflicted about this, since one would assume all assets would tend to fall in a bear swoon, but I just love DBA's pattern.
Anyway, the past three days of this week have been uber-profitable, and I'm really starting to feel in the swing of things again. Being out of those lottery longs is sweet too, because I have been able to nicely preserve the gains from the one (and only one, regretably) account where I got really aggressive on the long side during the run-up.