To those that went long after the bear trap since last week, congratulations because we tore the bears to shreds. (Editor's Note – AHEM) I don't know how many traders on other forums and their twitters, kept adding to their 3x leverage ETF shorts since last week, and getting absolutely crushed… Anyways enough of the rant because they might soon be right. In fact although I enjoyed all of last week and Monday's trading, any signs of a breakdown and I am out of my position.
Many indicies have broken their resistance from the weekly update and are now joining the European markets on their daily rally.
The VXX has broken down from its hourly channel, and at the end of the day broke down from the bear flag!
FAZ also broke down from an important support line today… It was holding onto support during the day, and formed an inverse head and shoulders intraday, giving the bears some hope but massacring them at the end of day. What a brutal, brutal finish.
But those are basic boring charts…lets look at the market internals.
The lucky index doesn't break above the red line AGAIN. Although im going long by shorting bonds….this is a early warning sign I believe.
Now the mini evil index similar to VXX breaks big time support, giving the bulls another huge "umph".
However, the Evil Index finds some mini support on its middle channel….
I could show you all the charts that broke from their resistance, but I prefer to show the charts that are still at resistance, so that you can trade it upon a breakout or short at a fail.
-One of them is the Nasdaq Composite
Next up is ERX.. I was able to make a killing this year because I changed my trading plan. Instead of trading upon what the market told me, I anticipated what the market will do. So while the neckline was forming for the right shoulder, I knew it was going to be a head and shoulder and so I was able to ride the rally of the right shoulder, and short the whole thing down…. Now ERX looks like it may be forming an inverse head and shoulders….look for target to right shoulder area.
UDOW, high risk, low reward now….
UPRO same thing
EEM
30-year treasuries finds some mini support on weekly channel line
I am very happy of my profits and now I'm very cautious depending on tomorrow's action. Just like we can have bear traps, we can also have bull traps. Confident on my longs since last week, but now I'm very cautious for tomorrow….If the bears don't bring in their game tomorrow…then I can relax but lets see. Although the normal charts look great for bulls, the market internals are telling me to be VERY careful.
In fact tomorrow is a very important trading day and I am ready to take profits on bond bear, and go short if need be. But of course if markets look strong, I can relax….but I have a feeling its going to reverse….
Check my site if you have some time!
