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Wednesday, May 5, 2010

FAS down 66 but only 1.7% ?


We are having a very good streak of very violent days.  For past 7 days FAS has had very large ranges. Either I can sit in awe frozen and watch the market unfold by itself or use what ever I know and the knowledge from other successful fellow bloggers  and come to a logical conclusion and trade.  I choose later. There are 2 main reasons I trade. In the long run it will beat the buy and hold and secondly it is exciting.  I don't trade every signal.  As long as I end up positive for the day I have done good. 

When I woke up and saw FAS in pre market it was down $66.  After a few minutes with the broker I learned that FAS had a 3 for 1 split.  Why we need one now I never understood but some one decided we should so we do.  That threw me off quite a bit,  and I had to redo my Excel workbook for the split during early morning.  May be next time Direxion may want to tell us in advance and do it after close. Nonetheless the market and FAS opened down hard this time on spain.  It was not a Dino's KOD day but close.  The low came in the 7th minute.  Dino's KOD is only valid if the low happens in the first 5 minutes. The low came at 30.72.   DMRM kicked in at 31.71. I went long at 31.71.  Shortly plumbers came to do some work totally distracted me for the rest of the day.  FAS topped out at 33.54 and I got stopped out at 32.47.  Normally I would have shorted at 32.47 with my attention not completely on the screen I let it go for another day.  The low since is 31.40 and my buy point is 32.4.  FAS did hit the bottom of the envelope and is back inside in the 30 min with 77 period mvg avg.  I have adjusted the bottom of the envelope to get better contact points.  FAS is well below the DOMA and that is not positive. 
The whole move from 1220 on the SPX does not look impulsive meaning there is no threatening reason for the decline and it is not very steep and forceful. IN EW words it is corrective.  Market (SPX) is burning some of the gains so it can have a better rally again. We have completd 61 days since our feb low.  The last cycle was 65 days.  Some believe the whole move from 666 is not impulsive and yet spx has moved to 1220.  It is a little confusing to me.  My buddy does excellent EW   analysis.  He is at http://ewtrendsandcharts.blogspot.com/.   The spx chart is a candle chart with parallel channels drawn a slightly differently.  I thought it was interesting.  There may be a bottom at or very near 1145 - 1150. I will still be playing DMRM on FAS.  I am bullish but not gung ho.

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