The bounce

So the New Claims was the latest in a series if heavy hitting economic reports that are all starting to indicate there is no moderation of anything in the economy, apprently there is an acceleration of bad news. QE2 GDP is already being rumored to be cut to 1%-that puts us dangerously close, right now to a double dip and this is why I opined about the Fed's apparent lack of will to get serious and get in front of this thing, not that it matters to me as I'm a shrot, but it shows and tells you something very important, I think you can figure that out for yourselves.

So we had a positive divergence yesterday and some deep discount buying in after hours, this brings average cost down, to what exactly, I don't know but it means they don't have to bounce it as high as where the positive divergence strted as the average cost would be less.

1-min 3C

5 min 3C

As you can see the divergence is still there, but showing some movement that may be the start of a reversal. Between what was bought at EOD yesterday and in After-hours, I suspect we have probably are close to passing the averaged cost paid so that means they are into profit. How high does she go? $109 is a serious level of resistance now, certainly $110 (SPY) and $110.70. I don't see the first gap created yesterday morning being filled-that's a classic break-away gap. So this is a good opportunity to look at the shorts and the inverse ETFs on June 3rd of the June list and perhaps start slowly scaling into positions you like, when the reversal comes, you can add a bit more, but figure out how much you want to risk and build the position, you don't have to buy everything all at once.  THIS IS NOT DOLLAR COST AVERAGING THAT I ALWAYS SAY TO NEVER ENGAGE IN because dollar cost averaging is in response to a losing position, this is pre-planned building of a position.

So we'll keep an eye on it, but remember that bounces are meant to be scary, they are meant to take your shares so they will often carry further and faster and perhaps longer then you might anticipate. The point is to separate you from a good position so they can take it. Don't let them scare you, you guys are the wolves, you guys understand how the game is played, shrug it off, laugh it off, just don't be run-off by sheep. If anything serious materialized I would let you know. Just use this as a blessing to help you get better positioning.