I can't believe what happened today. After yesterday's sharply down day, all sectors were down, and today is the reversal of that with even more strength? Who said the market is always right? What makes the market down yesterday is not longer true today? One of them is wrong!
- I added DIA puts today, and the one added early is already under water. I hope the market will swing back again tomorrow, a sharp down day with even stronger per cent. That will be fun.
- I don't know what to believe. The previous three months since early March, we're in an unprecedented bull march, with at most a two down days in a row, and usually 5 to 6 up days in a row. And last week we have three days down with big volume, you got to believe it's something new, even from TA perspective, it's an indication of change.
- But no, it just rallied right back. I still think it's just one up day in a correction, but if I'm wrong, I'm dead in the water again.
- The things I learned are to take profit quickly, after I bought the DIA puts early today, it's up more than 20% in the middle of today, but I waited, and after market took off again, my early morning peak pick (I bought the DIA puts when it's over 100 point in the morning) became a dead fish again.
- For now, I still think it's the start of the correction, not the end. But next two days can change this. A good PPI number will squeeze the shorts again, another good CPI number, we can talk about new highs.
- On the other hand, we can sell off again the next two days.
- I will reduce puts on a down day, and maybe on a rally day. If it breaks out tomorrow to take out last Wednesday's high, that seems to me is the end of this dip.
- I'll do more research in the future than trading. Trading is easy way to lose money if you're wrong, specially if you're using sharp tools like options, a quick way to kill yourself.
- I think the bond story is not a one time wonder, it's here to stay. The inflation is not a one time wonder, it's here to stay. And summer is here, so I don't see how can this market keep marching higher. At least, it needs swing up and down.
- I'm keep a bearish view and will play on the short side for now.
3 comments:
I recommend you to use RSI, put/call ration to judge the status of market. These days, market is over sold to neutral, you should wait until market is over bought to short.
Have a look at this chart, showing today, possibly tomorrow is a near term top.
http://www.tradingthecharts.com/phpBB/07-BB_upload/65-2.gif
Also, have you joined this group for market timing?
http://finance.groups.yahoo.com/group/TimeandCycles/
Good luck, curt
I've followed your blog for a couple of months and enjoy your point of view. However I might point out that if the bond sell off has stopped I think downside risk have decreased and we go up more. If you look at the bond etf (IEF) you'll see that it can't keep going down like it has for the last month. I think bonds rally again or at least stop dropping and market rallies. JMO Jason
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