DID I HEAR THAT RIGHT?
I think Roger Clemons would say I misheard that?
CNBC the ultimate cheerleaders for the stock market just had a guy on who said some people were bracing for a major selloff. Well what a typical comment from someone in reaction to a very weak opening today. However, all weak opens are not created equal, and this one might be telling us something.
In discussions with a few colleagues yesterday we all agreed that even though we had a big bounce, this short trade still looked good if yesterdays low was taken out today. Since we gapped below the low, that obviously happened. As per what I said in prior posts, I did load up the boat with individual stock shorts. I did exit my Canadian Dollar short just for the record this morning just because it is into a support zone on the weekly chart and is one of the strongest currencies. I am still short the Euro, Soybeans, the SP 500 as well as several individual stocks and also long the EUO the inverse ETF for the Euro. Below is the Canadian Dollar trade.
This might continue to decline due to the overall market weakness, but I always want to be short the weak and long the strong. From the get go this was a quickie in my plan. I apologize that this chart is hard to see I am once again having problems with the Genesis program with live data so I just shut it down and launched it on another computer.
Now back to the indexes and why I feel that this open might be a bit different at least from a short term perspective. Below is a chart with a move below today's low projected with some of my indicators. What you will see is an acceleration to the downside would occur in one of my trend indicators if today we traded below yesterday's low.
You can see here how the trend is confirmed by a move below Monday's low which has occurred. We are also breaking the obvious trend line that could be drawn in here. As a result we could have a decent move on our hands. We have to expect the PPT to try and intervene here but these heavy volume moves are tough for them to stop and they usually do not succeed in doing so. It is too early to tell if this is something bigger or just another pullback that is a buying opporuntity. It is most likely the latter but we will have to see. It is exciting to see big moves be they up or down, but other than short term trading profits, you cannot necessarily make more out of them from a long term perspective.
At this point we are down over 70 points in the NAZ which is not chump change, so maybe by days end things will have changed. I would expect to see the following for the rest of the day. A volume fall off where the PPT shows up with buy programs to boost things mid day. I think it will be met with a heavier wave of selling that will take us back down to new lows at the end of the day. As much as I know the blog readership always picks way up on these big down days, there is not really anything else to say but sit back and watch and stay out of your own way. Hopefully some of you are positioned in a way to benefit from this. If you followed what I was doing you should be.