Bounce , Bounce, Bounce.....

Last night I wrote on Trade Guild that I thought we'd see a bounce up, we got that today . 3C is looking like we'll see some more tomorrow, as are the after hour indications. I wouldn't be surprised however, to see the day end mixed, neutral or down.

Again, you can use today to enter reasonable short positions, I'd advocate buying the position or shorting it in 1/4 or 1/3's. The idea is not to fill out the position until we get downside confirmation (the bounce is over). All of the ideas listed, especially the broader ETF's, are all good selections. The best strategy would be wait until you see a breakdown, or a new low and then add to the position, intraday is the best or near the close.

The move up today was unimpressive and the market breadth was horrible, the dominant price volume relationship was close up/volume down which is actually the most bearish configuration even through we saw a net gain on the day.

I'd say a break of 118.20-118.40 on the SPY would be a trigger to add. You could also add at a run up to resistance at the 122 area, but you'd need to close out that part of the position if the SPY were to close above 122 or at least thin it out, this is why I'm saying "go slow putting on your shorts". Also that's an ideal area to take profits on longs and reduce your long exposure.

The break on the QQQQ would be at $48.90 and the DIA around $109.70.

My favorite tend to be the Ultra-Short ETF's. Be sure you do NOT over-correlate positions in similar industries.

If you are using 3C, watch the 5 minute chart for negative divergences near resistance-that would be an ideal time to start building or adding a short position.

Today's advance is meaningless in the context of the damage done on the last move down. I believe this is a bull-trap and it will trigger on the SPY at 118.20, QQQQ 48.90 and the DIA at 109.70. Watch for big volume as price crosses below that level, at that point it is likely you'll see a waterfall sell-off.

Email any questions to me at BT24_7@yahoo.com