Oh yes it is. Stockcharts only allows for 3 horizontal lines on the non-paid service so perhaps I would put one at 840 and also at 820... perhaps 915 or so at the top... but these three on here are by far the most important.
I had a very nice short over the last few days on ESI (Trader Mark brought this to my attention) and EBS on Wed... but I have to say I have been fuming all day today because my SSO and QLD stops were taken out on the "Full of Mendacious Crap" meeting that is the only thing that could have risen high enough to take out my stops... then on Thursday I wasn't around to reset the shorts.... It's one thing to be wrong and take a hit and its another to have the Fed come in and ineffectively try to save us and just screw the market for everyone thats not a day-trader. Simply put Bad Bank is like Bad Santa which is to say it's cute but it can never work in reality. Most likely this is the first step towards an attempt to nationalize at least some banks... banks that are not so concerned about going under that they can actually lend to credit-worthy people. However, for the Obama administration to come in and in the first few weeks declare the need for Swedish-style national banks would have people across the country screaming 'socialist' or even 'communist'... even though the Swedish approach in the 90s is the most efffective ever on record... its amazing how much more acceptable socialism becomes when captitalism means losing people's jobs, savings, etc... just look at what's happened so far... but I rant...
For now, with the possible exception of some oversold conditions/day trades or on some stocks that are showing some real relative strenght I am only going short the market and IYR and adding more the higher up we go... and I'm raising my stop all the way to the 920 mark on the SP (equivalent on SSO and QLD)... even though I firmly think we see 750 before we see 900... the reason for this is that I do believe Elliott wave theory... though we must all admit it is not an exact science but a probability science.... and the greatest probability is that we go down significantly unless we break 950... and the downside is more likely. The other reasons are, as I mentioned in my posts last May just before the market collapsed back down, that the worst sectors usually lead the rest of the market and financials and banks and real estate have done this again recently. Additionally, whenever we go up we slam back down quickly and, moreover, all this tentative sideways action is not what historically leads to a sustained rally... first there has to be a serious flushing of the lingering optimists... once we have that and everyone is talking about how this market will never recover that is when I will start looking to buy...
In fact I am making a buy list right now but unless we flush down or break 950 with volume and hold it (which I deem much less likely) I do not plan to buy anything except for short-term trades and even then with caution. This is my take on the current market condition. I would like to talk about the Pyramid Scheme that is the market at another time and have started a post on this but it is not yet complete.
So my strategy is clear... short moderately at these levels... a bit less as we go down and a bit more as we go up... with a stop at 920 area at which point I would look to go short again as we approach 950 or slightly below... on the downside we may bounce one more time off of 800 but I think soon we go right through to test the lows around 750... that's where I plan to cover and reload on the short-side. Just my strategy for now. Thoughts? I am amenable to them. Just don't get me started on that BS bounce Wednesday at the FOMC... from now on I am covering all long and short positions in this market the day before the FOMC reports... Sheeesh!
"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.
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