Tuesday, May 18, 2010
Shock and awe
Today the markets opened with a bang. Spx was up 11.5 points within minutes and FAS opened and in 2 minutes reached its high of 28.87. After that it was all down hill. Drip Drip Drip the indices fell. SPX managed not to make lower low it did make a higher high maintaining the upward bias that is positive. But FAS is in bade shape made an Intra day reversal with a higher high and lower low. that is a negative. I got one signal to go short at 27.97 and I took that but exited rather early at 26.88. Rest of day I just watched the market. News interpretation got quite negative and even Cramer started saying we should take some money out of the market. Germany tacked on some restrictions on short selling in certain securities. The markets and particularly FAS closed in negative. FA is outside the envelope in 60,30 and 15 min and below the DOMA 77 it is quite negative. We had yet another DKOD and that is also a big negative given previous day was not an DKOD. I only count the first DKOD and not the successive ones if we get 2, 3 in a row. The charts are my best rendition of Gann angle charts for SPX and RUT (Russell 2000). RUT looks less beaten than SPX. RUT is at the half way point in the channel. They are very close to support angle lines and could snap back. This is option expiration week and anything can happen because of added leverage from options. I am less bearish than before and if an bull run comes I will jump in.