VIX closing at the highs, Selling intensity too strong for any kinda immediate bottom. Looks like 1850 (Flat for the year is now in the cards). I would still expect some sort of bounce, the intensity and the extent will determine the lower high that would be the next major short-able bounce for years to come. Hopefully, this down draft does not lead to a market crash and we get another opportunity to go completely short for the 70%-80% decline that is about to follow in this final phase of the secular bear!
Holding FAZ??? never hold 2X and 3X short funds ever... Unless you're in a confirmed bear market (like 2008-09 fall). those things will wipe out your $$$$$... I wouldn't go ahead and short blindly right now... You've let the market bounce and evaluate the strength and extent of the bounce. The best day trade for now is to sell puts intra-day when VIX is elevated (if you're trying to go long) or do call spreads if you plan to hold over night. Even if this is beginning of the a longer terms downtrend, the upside rallies could be vicious and strong. many bears got wiped out not cuz they were wrong, but their timing was off. My real play is a 20-30% market crash in a day... but, to get the charts bit similar to 1987 pattern, I think we need one more lower high, some where between 1955-1970 (If the current low holds)
Like I said before the market is at the brink on entering the biggest bear market of our time... It could wipe out 70-80% of S&P. I would not enter in any long term positions in any stock... Take CLF for example it has fallen almost 50% since mid September. You've be very nimble to trade on the long side... Buy & Hold will wipe you out. I think the downtrend is already starting to unfold...Yes, there will be vicious counter-trend rallies to the upside, but the primary trend willl be down. Global deflation is real and here to stay... Do you think JCP and CLF will survive another recession or maybe even a depression? Try looking for over bought, over owned and euphoric stocks and play the short side to ride this down-draft. This is why I put my big bearish spreads on X! I'm looking at names like GMCR, HD, DIS, some banks on the short side... plenty of room to fall!
Yes... But the tool I use is not very precise on the chart to my mouse movements, so it is 46.54 and 32.2, but might be off by fractions.
31.5-32 is the line in the sand, it needs to hold this level of the retracement to $28 will happen.
Also, if closes below the gap up low of 31.21 then the gap will be filled 70% of time.
It is a calculated casino... Nothing about the market is random, the only unpredictable and unstable factor is "Investor sentiment" which turns on a dime!
You're welcome... I closed out my trade today for very nice gains :)
Check you my new post about "Where X goes from here"?
Anyways, I might start looks at the beaten down names Coal & Iron ore names for a quick trade. My longer term thesis on the market is we are setting up for a crash type scenario... Waiting for that lower low, followed by lower high to go all in on the short side.
This post is also dedicated to "MaxActionJunkie" and some other retail investors who presumed that stocks go straight to the moon without retracements,
I've been trying to explain to you guys for weeks now that stocks trade 2/3rd of the time based on sentiment and technicals drive the sentiment... Well at least for the machines. Some found it funny, amusing and even ridiculous when I said this is headed to lower 30's first before any upside. Well, here we are and it is no coincidence or luck. If you want to stay in this game then better understand the machine speak (TA) cuz they handle 80% of the trading. Also, understand WSA are not here to guide the retail, but to help their big clients make $$$$. Don't fall for their upgrades at the top and down grades at the bottom.
Anyways, my initial price target of $32 (today's low was 32.21) has been met and I closed out all my PUTs today for very nice gain. If the broader market stabilizes and today's lows hold (At least for now) then you can take a shot at the long side (Just for a trade and it does not change my thesis that steel is headed much lower on the longer run)
These are the retracement levels:
23.6% = 35.5 (Will def. hit this level)
38.2% = 37.87 (Will prob. make it here)
50% = 39.53 (If 50 DMA is broken then it will get here)
61.8% = 41.18 (With earnings can get here)
78.6% = 43.23 (The most upside possible before the resumption of the primary down trend)
Again, if the broader market falters or even worse break the 200 DMA starts it's free fall X would plummet to mid 20's. But, i give a 70% chance for bounce first...
Took my profits today under $32-$33. It has been a painful trade for the first 5 weeks, but paid off well in the end. It might try to fill the gap or bounce first.. I'm OK missing a few more $$$. $32 has too many support factors that I'm not willing to risk my hard earned profits. If the broader market bounces, x can get back to 50 dma at the minimum.
I rest my case... warned about the intensity and strength of this down draft. Like I said weeks ago... market has a date with it's 200 DMA (S&P 1905 level) . Mr. Market hasn't seen her in almost 2 years... Boy! she must be really mad and might not support :)
Getting closer to my price target of $32 (Very important level for several reasons)
1) 61.*% Fib retracement of move from June lows (22.47-46.55)
2) 100 DMA
3) June lows trend line meets there
4) $31-$32 was prior resistance on 2 occasions and can now become support.
It should find reasonable support here, but the X factor (No pun intended) is the OPEN gap, It acts like a magnet and can get filled.
As usual, a lot depends on the broader market (S&P 1905 level) action and like I said weeks ago... market has a date with it's 200 DMA. Mr. Market hasn't seen her in almost 2 years... Boy! she must be really mad and might not support :)
FED does mess up most of the indicators, oscillators and trends, but eventually they will find out it is only a matter of time...
It did not peek over the 50 DMA in S&P cash.
" up we go (not sure about new highs but who knows)"
We have a lower low in place, not just need a lower high and reverse to continue the downtrend. We stopped right at the the downtrend line... The next 2 days might be most crucial days for the markets for a very long time.
Big come back by the BULLS today... Thanks again to FED :)
Current retracements from Monday's highs:
DJI = 78.6%
S&P = 86%
NAS = 78.6%
RUS = 78.6%
The Wave count is still in play unless the Monday's highs are taken out. But, if the market moves lower or gaps down then brace yourself for Wave-3 within the primary Wave(3)
If the buying momentum continues then will have to reconsider the wave count.
One day move doesn't make a trend. Too many traders got short after Russell broke down yesterday and scrambled to cover! Unless you take out Monday's highs, this move is just a Fib retracement and the downtrend will continue... At least volume & volatility are back, good for Bulls & Bears :)
Like I said yesterday, You're looking at the most powerful phase of the decline and i don't think the market will retrace much during this down draft. The Russell broke through the 1082 support that has held since Feb-14. Now this opens the door wide open for 1000 as the next target and further targets are 940 and 865 (If this turns out be much uglier)