I labeled the resistance line formed by yesterdays lows. Notice how price action bumped up against this line at least 1/2 dozen times throughout the day. This is a key level going forward. Will it serve as resistance or support?
Next, look at how we gapped down at the open and DID NOT retrace the gap during the first hour. That is usually bearish - but it is also a strong pull force for price action to return at some point. Frankly, I would have prefered to see this fill early and be on with the downward move. We have to watch this gap tomorrow as well. What will happen if it fills?
Earlier in the day I posted about the triangle that formed and resolved just before noon. My comments on the triangle can be read in my prior entry. I will just say that I was pleased that I took my profits as soon as I saw this formation. Look how the 5 wave EWT rally broke out to the top side. In fact, the third wave of this EWT has a classic gap - which I later used as bait for another successful short play once price action was rejected at 1066.
I was very surprised that price action failed 4 times at 1064-66. This is unusual. Three times is a charm they say. It took a fifth attempt to create enough of a squeeze on the shorts to pop up and attempt a gap fill. Guess what, the attempt failed. Price action was firmly rejected at the base of the gap - enabling one last short play to finish the day.
I can not tell what is going to happen tomorrow - but I remain bearish and resolute in my short position. I'll continue to trade the ES during the day to maintain income. One final look at the daily for all those who question my rationale. We pierced the top BB and will very likely head back to the lower band during the coming weeks. I will see this out to the finish.
8 comments:
Great ink David , I am with you tomorrow is a crap shoot.
For a few moments around 11 today I thought we might rerun last Monday.
but there where sellers today , buyers and sellers , I would call it a tie , but for end of the day , I give that to the sellers.
I also remain short , wow 993 seems light years away now .
Waiting for it to come our way
Hey David, I read your blog everyday and appreciate the insight. I am a VP at a 40 billion dollar company and amazed at how the stock market doesnt reflect reality sometimes. I tell you Peoples buying habits have changed and I believe it will be a while before any normalcy(past couple years)will comes back into retail . Year over year Retail sales went negative last week on a prime back to school week and it wasnt even in the news . It is amazing how this goverment of ours is fooling the media of what is reallly going on . I am slowly believing that our goverment might get away with inflating away our debt to a managable level. Who knows but I will remain short for a while longer if the S and p stays under the 1074 level . I took your lead and doubled up at 1073 today with a big position from my original short at 1014 . I was thinking of walking away at 1080 and lick my wounds .After 1080 it looks like clear sailing up from what I see. What are your thoughts on a exit strategy with being short if it comes to that. Again thanks for the work on the blog.
Keith
Hey KJB,
No doubt this is a tough market to be short - it seems to defy all fundamentals and technicals. When I decided to fully load my short position, it was with the expectation that we will see a market correction in September, perhaps October. I acknowledged that the rally could continue and we may see levels as high as 1120. I prefer that his does not happen - however I am prepared for this to happen.
For the market to continue its rally, the dollar must continue to fall and we can not see a hint of negative catalyst. I think we will see some stabilization in the dollar and I suspect some sobering news is inevitable.
Keep in mind that corrections occur suddenly and violently.
Having said all of that, I try to minimize my short exposure with a long silver position, intraday ES trading, and the buying/selliing of option spreads around my short securities.
Unfortunately, our position is a gamble and as such, we can lose. My comfort does not extend much beyond 1120 and end of October.
Good luck with your position!
Thanks for the reply David, 1120 makes sense and regretfully I am no stranger to a loss. No risk no reward as they say. I just like to establish my exit before hand. I really thought it was going down Monday morning but no such luck. Best of luck to you and hopefully patience pays off.
Hi KJB and David , Im right in that boat with ya all ,
I agree with both of you , and hoping the top would be 1080 1084 ,
Baring something else from now till then , 3rd 1/4 Bank numbers will be important , and make us right or wrong. note , palms numbers sucked and they still got painted pretty , up 3 bucks from release.
John Maynard Keynes, " the market can remain e rational longer than we can remain solvent"
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