WE HAVE RESOLUTION
We finally have a breakout of the range, and it is to the downside the way I was leaning. For those who might be bullish, if this were to reverse quickly and breakout to the upside, you should definitely reverse to long. I suppose if you are bullish you would not be short so maybe add to longs if that were to occur. There is an abundance of reasons for a decline, and none for an advance from here. However, that has also been the case for quite some time, so the FED has fought off all challengers to this trend so far. As I have said repeatedly, they can't stop volume selling. They launch the buy programs when activity is light and they can really move the market quickly. Heavy volume down days usually do not provide an opening for them to do this.
The oscillators I rely heavily on have not given great reads here. They show downtrends, but choppy ones, so I am not heavily short. I am trading stocks off weekly charts now, so much bigger stops hence smaller size on the trades. I like not having to babysit those trades everyday. Stock chart patterns are not as clear as futures patterns, but they get smoother on weekly charts. I am still short the evil empire Goldman Sachs also RHT and a few others.
Getting back to the indexes, certainly now if we go down a good bit then bounce, the bounce is a shorting opportunity. If it immediately reverses and this is a false break, I would not short the rally. We have seen alot of traps in the last couple of years on the short side. If this market is going to correct the amount it is long overdue to, we have plenty of time to get short on bounces. As I have said, I think at some point this year we are going to have a very big decline, I do not know if this is the beginning of it or not. I was looking more to late summer for that to take place. As always, we just have to follow the action. This is why being a long term trader is so difficult, you have to know what is going to happen a year from now, and I just have no idea about that, NONE!
Maybe this will be known as the ICAHN selloff if it gets away from us here. Today and tomorrow are important to see if we stay down and follow through. Make no mistake about it, a monster drop of 4 digits is not out of the question here. This market has been artificially driven so far for so long, that an over correction is going to happen, and it is going to be nasty when it does. I am not predicting that, I am just stating that it is something that could happen. That FLASH CRASH was not a one timer, it will happen again. Prices for assets have a funny way of finding there way to where they want to go eventually, no matter how much we try to stop it. This is why when prices get over extended in either direction, you have huge reversions. It is really prices finding their own natural equilibrium. When we enter into artificially driving them too far in either direction, the sharp moves just take us to where they would have gone all along on their own. The moves seem so much larger because we have artificially pushed them to far away from their natural point. Can you say real estate?
I had also mentioned GOLD as a sell the other day, so I hope some of my readers caught this move.
If you have not do not worry, this should be a big move down, so just short the first bounce. I have talked about this market many times, and it is beyond ludicrously extended on the upside having been driven by small speculators and not big money. When this market falls, and this may not be the big one, it will get halved quickly. I just don't know if that is tomorrow or 2 years from now. I just am 100% sure it will happen at some point. Too many of the "wrong crowd" have made too much money from this. The markets have a sinister way of cleaning out small investors time and time again. So far they are getting off on the big guys, but that will not last forever. I showed graphically the proof the other day of the small speculators driving this move. You can get back and look at that if you choose to. It is unprecedented in history.
As for other markets, if you read my commentary every day you saw where I said we are looking like we are turning down in several futures markets. You can take your pick today, virtually everything is down quite a bit. We have more coming, so pick your spots and go get em!