These Dreams Can't Fly Any Higher - 6/27/07

This market is entering into a chronic stage. The persistence of the S2 reading is very troubling indeed.

Usually these moves only resolve themselves with some sort of massive panic attack. There is still too much denial in the system.

Rise of the Silver Surfer - June 15, 2007

I should just take the expiration week off!

I expected today to be a blow off, and the market did not disappoint. I shorted overnight 1547 & 1549.50. I was looking to capture a data driven electronic spike, and then quick reversal.

Instead, we are getting one of those slow and painful spikes, which means a lot more people are going to get stopped out before we see the retracement. It could be next week before we see the retracement.

We ended the six day streak of S2s with two S1s. Clearly we are returning to bull mode.

This means that "BUY THE DIP" will come back.

I am going to try to hang on to this short without getting stopped out. My stops are 10 pts 1557 & 1559.

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P.S. I covered at 1547.50. So I ended up making 0.75 pts. Not great. It was a bit of a punt trade. My guess is that if I held one more day, the gap would fill. Oh well, time to move on.

I survived the great Rise of the Silver Surfer!

Being Right & Poor - June 12, 2007

It sucks being right and poor.

I had a good call yesterday. I was short the July 1560 calls and long the 1480 puts. When the market rallied from 1510 to 1516, I freaked and covered.

I couldn't stand the pain of not getting on a perfect trade. I've been spoiled by lucky trading.

And today, I was short in Sep 1518, the market at first dipped, and then ran up and I was stopped out at 1517.50. I tried to reestablish my short at 1517 and was forced out at 1520.

Again I was playing super tight.

Even if I had a wider stop, when it hiney spiked up to 1527, I would've been taken out anyway.

The bottom line is that I had my horizons all confused and so my stops were not right for the trade that I was planning.

LESSON: Long-term trades need wider stops, and bigger profit-taking levels.

We now have five straight S2s. Playing tomorrow will be very difficult cuz shorting here requires a break of the lows. Hineys will also get very painful.

One strategy could be to wait for the hiney to short. This is always profitable play in these markets.

BOUNCE - June 8, 2007

We are bouncing here.

I was set-up for it overnight by buying 1491.25. I put in a stop at 1486 figuring that the overnight low should not have been violated. It was, but I was not stopped out. I set my bracket orders incorrectly, so I totally lucked out and was not stopped out of a good trade.

I took my profits at 1295. OK, not the most profitable trade. But my strategy is to be Ichiro and not to be Barry Bonds. If I can just get on base a lot, I'll be mega-profitable over time.

So, we are waiting for the close. If it closes below 1294, then it is a bad sign and we are likely to move to a BEARISH regime. If it closes above 1298, then we are probably going to go back to the BULLISH S1 regime, if only for a brief period.

The LIQUIDITY MEME is still dominant so I think we'll have a recovery (although I am currently out of the market pending updated sentiment).

Its Beginning to Look a Lot Like Selling - June 7, 2007

I shorted 1520.25 and bought back 1516 in the wee morning hours.

The fact that the market has made new lows is a bad sign. It means that the S2 calls require new lows, and must persist at least one more day.

We will eventually bounce, but the pattern is a transition pattern.