Monday, March 02, 2009

Helmet Cams (don't forget to pull the shoot)

The market internals remained extreme today (in fact they worsened) and the market did indeed close on session lows. [NYSE declining stocks topped advancers by 15-to-1, while Nasdaq declines led 7.7-to-1. Down-volume on both exchanges was >90% of total volume traded; a future buy-signal]

I'm not turning bullish, but the extremes in today's internals did cause me eventually to lighten my overall short-line, as least for overnight, and I'm now looking for the possibility of the market to begin turning the worm in the near future.

>90%-down stocks and down-volume days are quite rare and in fact a solid old-school indicator that a strong counter-rally is close at hand.

Close, however, refers to the calendar on the wall and not to price (try learning that the hard way, you newbie!). Why? Because oversold is never a buy signal unless/until the market is already rallying (repeat that daily).

Oh, and this ain't old-school anymore. Who knows what these kids are capable of. You won't find this trader drawing any support lines going back to my parent's prom, I'll tell you that all day.

Investors looking to get long then (still) have no reason to rush (even if we thrust higher, the all-too-common re-test of lows is ever-likely to come into play.

Traders looking to go long might get ready though; your day is near.

And completely insane individuals who are short and looking to get long, only to short again for the retest lower and then long for real for a bona fide counter-rally - well, eat your Wheaties lads, this ride ain't over yet and pappa's pocket's is fulla quarters.

Cliff Notes: I'm only 30% invested now (100% short). I will increase again if the internals remain severe, yet I am looking for when and where the first rally attempt is to begin. At that point I want to trade long for the initial thrust, bail out and then turn short again for the inevitable retest of lows (which may not hold, obv., so in that case get back to whole-hog short again, bloodstains on my teeth, gums and neoprene skivvy's); and then try to hold out until we finally see a real PRICE PANIC, for Pete Maverick's sake, before turning long for the real counter-rally - and all that before springtime if possible.

Check the FeedTwat for the day's dirty work >>>
Keep the helmet cams rollin'!

Total Position: 100% short (30% invested)

Currently Short (according to size): SRS-long (Real-Estate Dbl-short), VNO, AEM, NYB, ETN, PETD, MDR
(Note: above long inverse-ETF SRS represents being dbl-short the respective index)

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