I do not think that I will be posting new trades tonight (although check in the morning as I'm still looking over charts) because I posted a lot of limit trades that should trigger if we get the downside that I believe we will see shortly. Also the core of our positions is in the inverse, leveraged ETFs. The only excellent long I'm calling out is UNG, it's not too late to buy it.
If you have a question about the outlook for any particular stock or industry group, email me.
Our plan has not changed, we are still looking to add the final 25% bringing us to 75% short when the SPY breaks the $104.40 area. We will keep 25% in cash for opportunities.
For whatever reason, it seems that 3C is one of the few indicators that is thriving in the new "volatility based environment". Traders are being punished all around trying to hold positions with this volatility and many feel they can not get ahead of the algo-trading. 3C seems to uncover icebergs. Right now we are on the event horizon of a dramatic shift in the supply/demand structure of the market as Wall Street has been busy laying the trap that will destroy a lot of accounts.
Wall Street understands that the dollar can not continue to rise without negative effects to the bullish environment traders still think we are in. Just like trading options and making a lot of money in your first trades, people become emotionally attached to that which has made them money, in this case the uptrend that started in 2009. Do not become attached to what was, the next event will not be the same as the last. Stand back and look at the world economy, what does simple common sense tell you about the direction of the market in the coming months?
Go back and look at the charts of the Dow now vs. the Dow pre-crash 1929, it is striking.
There remains the possibility, not probability, of a right shoulder taking shape, a 5-day chart will illustrate this possibility fairly well.
As for today's events, the Dow staged a one day false breakout. The NASDAQ, S&P and DOW are now in close parity. The dollar index took a big hit today, the market could not take advantage of it, rather chose not to. Gold has started to form a daily negative divergence, meaning distribution has begun in the commodity, this does not imply an impending reversal of trend, just that intensions are there and they do not portend for a healthy bull market in gold.
Based on observations, but still an opinion, I believe that we will see a market completely decoupled with the standard market relationships that have been in effect for over a century. Something very strange is happening and assumptions based on past market behavior are apparently being setup as a terrible miscalculation.
All of this said, I would be 100% remiss if I did not implore you to keep risk management as the forefront of your defenses. We could be 100% wrong, events could change the landscape and smart money is not always smart and reserves the right to change their mind with little notice. WhiLe I believe we are on the right track and I have a lot of money committed to this idea, we must always accept the possibility of being wrong and the only life preserver in such a scenario is risk management. IF YOU DO NOT HAVE A PLAN OR DO NOT UNDERSTAND RISJK MANAGEMENT, EMAIL ME IMMEDIATELY SO WE CAN WORK SOMETHING OUT TO PROTECT YOU.
Finally, this chart of the NASDAQ Advancers/Decliners clearly demonstrates how quickly the market turned today. As I said on Trade Guild, this market is in a lot worse shape than it appears to be.
Look for early updates tomorrow morning.
No comments:
Post a Comment