They bought the rumor (Bank Stress Tests) and Sold the News. Notice how the S&P 500 has climbed up steadily nearing the 200 day moving average only to get turned out when we got close there. So many people are watching the 200 day moving average to sell this rally and book their profits, but the market is not going to let them have it this easily.
This may be a one day event, but with my money I am betting that the next leg is down in this market, we probably retrace 38-50% (those wonderful Fibonacci sequences) of the rally. A 50% retracement would be around 130 points on the S&P 500 which would put us back at 800 which is where the 50 day moving average is and an important psychological point.
With my money, I sold the last of my BAC-B preferred shares and bought TWM, the inverse Russell 2000 index. I am holding on to LVS and DRYS for now just because I love the volume pattern on those charts but I realize that I could be in for painful pullbacks on those high fliers.
In my day trading account I bought QID, May SRS calls that expire in 8 days, May FO puts and shorted FSLR mid morning. Going to try to ride the down wave early. My stops are all at today’s highs (today’s lows for SRS)
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