It was a very frustrating day today for us. We thought we had capitulation at the beginning of the day, but there was none. It whimpered out. Guess the waves have to finish playing out. So the date of turnaround is put off at least till the late half of next week. We will probably see some heavy selling before that.
In lieu of this view, we loaded up on SDS when the dow was down about 200 points today. We think the indices are going to go much lower. We also expect the heaviest phase of selling to come on monday and tuesday. So buckle up
Sad but true.
Friday, October 24, 2008
Wednesday, October 22, 2008
What now?
CNBC has on its front page, if today was a capitulation bottom. Well we are close, but not yet there. We still have at least 2 more large sell time periods, which could potentially be more damaging than today. But the good news is a rally is close, as we said in the previous post.
Our plays - we will short on strength but with reduced position sizes. We covered some of our gold short, while letting the rest run with a trailing stop.
Good luck.
Our plays - we will short on strength but with reduced position sizes. We covered some of our gold short, while letting the rest run with a trailing stop.
Good luck.
Friday, October 17, 2008
Event Horizon -- Part II
The end of another nice week for us, though not as eventful/profitable as the last 2.
We are mostly in cash except for a small nugget of index shorts, loaded up today at 970.
We have a key turn date coming up next week or early the week, after that.
That should lead to a multi month rally.
As for the action, in the next week, we envision a symmetrical triangle formation/wedge formation on the indices. We think this triangle will break down. How low we go is anybody's guess. We may retest the lows again or even test the 2002 lows again. We are more certain of the time now than the price action. Since there was a huge amount of selling in the last 2 weeks.
We are mostly in cash except for a small nugget of index shorts, loaded up today at 970.
We have a key turn date coming up next week or early the week, after that.
That should lead to a multi month rally.
As for the action, in the next week, we envision a symmetrical triangle formation/wedge formation on the indices. We think this triangle will break down. How low we go is anybody's guess. We may retest the lows again or even test the 2002 lows again. We are more certain of the time now than the price action. Since there was a huge amount of selling in the last 2 weeks.
Wednesday, October 15, 2008
The week ahead and the next
As we said in our earlier posts, this market is not out of the woods and further tanking is in order. Our targets are around 815, 768 and even 713.
We will watching for everyday volumes and momentum indicators. This will give us a "tell" if the downside is saturating. This is exactly similar to the inverse scenario of the commodity bust that we predicted so accurately back in july. We believe a multi month bottom is a week or so away.
We will also be watching keenly for 5 waves down. That should give us a reason to start dipping our toe on the long side. Just so that you can synchronize, today is either a full or a part of wave 1. We will see a rally very soon either tomorrow or into friday.
Strategy: A small portion (20%) to short into strength and the rest is dry powder.
We will watching for everyday volumes and momentum indicators. This will give us a "tell" if the downside is saturating. This is exactly similar to the inverse scenario of the commodity bust that we predicted so accurately back in july. We believe a multi month bottom is a week or so away.
We will also be watching keenly for 5 waves down. That should give us a reason to start dipping our toe on the long side. Just so that you can synchronize, today is either a full or a part of wave 1. We will see a rally very soon either tomorrow or into friday.
Strategy: A small portion (20%) to short into strength and the rest is dry powder.
Friday, October 10, 2008
Caution
Firstly, we got a nice rally from the lows. We timed the 1000 pt jump to almost perfection. But our indicators are not behaving well. We are very cautious here. We are not out of the woods as yet. We ideally wanted to see today's low taken out or retested.
Consequently, there may be another round of selling or we want some proof that the rally can unfold in fives and not 3's, implying we want to observe the market for some more time. If it unfolds in threes, we have some more ways on the downside. Our target is around 815 and/or 768 or so, should it occur. Lets see
Consequently, there may be another round of selling or we want some proof that the rally can unfold in fives and not 3's, implying we want to observe the market for some more time. If it unfolds in threes, we have some more ways on the downside. Our target is around 815 and/or 768 or so, should it occur. Lets see
Has the moon been sighted?
On time, like clockwork, beautiful and a big :-) on our face, in our heads and in our account.
Lets pray it stays that way.
Lets pray it stays that way.
Thursday, October 9, 2008
Event horizon
We have not posted much due to our day job taking its toll in a tough corporate environment.
I will leave out charts for the same reason here. I guess individuals can do their own DD. The
We made decent gains this last month by staying short and finally covered all our shorts today.
We think tommorrow could be the abyss, and we expect a multi month rally. How high - sizeable. One thing at a time. Why?
There are lots of reason.
1. The charts are playing out in 5 moves down and 3 up. EWT theorists know what I am talking about. Today was move 3, looking at the futures, it is very likely that wave 5 finishes tomorrow.
2. We are expecting to see the investor intelligence sentiment index to hit a pick. If you take a look at http://www.market-harmonics.com/images/tech/sentiment/ii2.gif, we expect to hit the upper trendline. The peaks have been significant market bottoms.
3. Next week is opex. Banks are in dire need of money and a rally can be a cash cow for the put writers.
4. Wink wink!! Count the number of weeks between market highs and lows. We were amazed to find it is so perfectly periodic. Ideally this periodicity leads us to a turn next week.
5. The reason everyone knows, - divergences on all momentum indicators and oversold. How much value does this have? I don't know but I guess, it has been enough to scare us away from shorting for now.
We will start dipping our pinky toe tomorrow on the long side. Tech is the most beaten down and so are emerging markets. We expect these to rally big.
I will leave out charts for the same reason here. I guess individuals can do their own DD. The
We made decent gains this last month by staying short and finally covered all our shorts today.
We think tommorrow could be the abyss, and we expect a multi month rally. How high - sizeable. One thing at a time. Why?
There are lots of reason.
1. The charts are playing out in 5 moves down and 3 up. EWT theorists know what I am talking about. Today was move 3, looking at the futures, it is very likely that wave 5 finishes tomorrow.
2. We are expecting to see the investor intelligence sentiment index to hit a pick. If you take a look at http://www.market-harmonics.com/images/tech/sentiment/ii2.gif, we expect to hit the upper trendline. The peaks have been significant market bottoms.
3. Next week is opex. Banks are in dire need of money and a rally can be a cash cow for the put writers.
4. Wink wink!! Count the number of weeks between market highs and lows. We were amazed to find it is so perfectly periodic. Ideally this periodicity leads us to a turn next week.
5. The reason everyone knows, - divergences on all momentum indicators and oversold. How much value does this have? I don't know but I guess, it has been enough to scare us away from shorting for now.
We will start dipping our pinky toe tomorrow on the long side. Tech is the most beaten down and so are emerging markets. We expect these to rally big.
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