I think your message is to stand aside from position trades at this
time because the stop loss points are far too wide. I agree. My view is that we
have lower lows and higher highs in place and we are now in decline. Based on
this weekend's analysis, I will short a quick run to 1475 (broken trendline)
and 1487 (confluence of 62% retracement and bottom of previous range). Should
we get a higher low with positive divergences in volume and breadth, I will
pull my orders. It is going to be a while before I get bullish.
There are three sets of data which I have watched very closely and
which have kept me in right market direction.
·
Breadth
models on NYSE and NASDAQ: A/D issues, A/D volume, and highs/lows. A/D volume
is the single most important of the 3.
·
Credit
spreads: corporate and high yield spreads to treasury yields are an excellent
measure of investor risk appetite. The recent SnP highs were made with widening
yield spreads. Before I am ready to call a bottom, I want to see yield spreads
narrowing with equities rising.
·
VIX: also
a measure of risk appetite. I use VIX inversely of many because I do not
consider low VIX as bearish and high VIX as bullish (although I consider
extreme high VIX as possibly bullish). I want to see VIX falling as equity
indexes are rising. Recently, we had VIX rising along with the SnP as a bearish
divergence. I want to see VIX falling with rising indexes before I am ready to
get bullish.
My general view is that the money in this market is to be made on
the short side as long as one avoids getting in the way of Fed induced rallies.
Earl
From:
realtraders@ yahoogroups. com [mailto:realtraders @yahoogroups. com] On Behalf Of Rakesh Kumaar Sahgal
Sent: Monday, August 20, 2007 6:38
AM
To: realtraders@ yahoogroups. com
Subject: Re: [RT] Time to cover
the shorts??
On the basis of EOD charts:
[a] In terms of price correction the rise from 1363 to 1555 has been corrected
fully.
[b] For me to assume that the fall is going to be prolonged and the current leg
of the downswing has some steam left in it, the recent low of 1370 will need to
be crossed on a closing basis.A close below the 1370 low would clearly
demonstrate the weakness in the market.The very high volatility level and the
massive intra-day ranges though cause the stop loss levels to be too far from
the entry point and that is a risk anyone entering the market at the current
time will have to live with.
[c] For me to assume the upswing of the past couple of days is tradeable to the
upside we will need a close above 1445. If one were to enter a long trade now
on the basis of a close above 1445 , the StopLoss level I get from the method I
use is way too far to provide any comfort. So as of this moment I would avoid a
long trade. I would enter a long trade IF I get a buy signal from my method
POST a HIGHER LOW. Such a buy signal would inspire confidence as [i] it is
coming after a vicious correction to the prior up move, and [ii] there is clear
evidence that the low for the moment is in.
R
profitok@xxxxxxxxxx net
wrote:
from a close low of 1406 add 3% and you are 42
points
using tomorrow up 100 to 125 to short
Ben
----- Original Message -----
From: BobsKC
Date: Thursday, August 16, 2007 2:33 pm
Subject: Re: [RT] Time to cover the shorts??
To: realtraders@ yahoogroups. com
> I have just closed my shorts and am now entering some of the
> beaten
> down commodity stocks such as TCK which has huge asset to
> liability
> balances and a PE of 7. Still, I am holding on to 70% cash.
>
> Bob
>
> At 10:52 AM 8/16/2007, you wrote:
> >The way the charts look the current leg of the downside(if
> there is
> >more to come that is) does seem more or less done.
> >
> >Not a case of hoping against hope but wondering if it is time
> to
> >take money off the table in case of standing short positions.
> >
> >R
> >
> >
> >
> >
> >
> >Boardwalk for $500? In 2007? Ha!
> > Play
> >Monopoly Here and Now (it's updated for today's economy) at
> Yahoo!
> >Games.
>
Boardwalk for $500? In 2007? Ha!
Play Monopoly Here and Now (it's updated for
today's economy) at Yahoo! Games.