Monday, October 6, 2008

Trying to Prepare In Case This Turns Out to Be The Tradeable Bottom

I have no way of knowing if today was the bottom. I really wish we had more selling into the close followed by a gap lower and bullish reversal tomorrow, but perhaps that setup is too easy. I do know that all of my indicators are at virtually historic levels and my local news broke in with "breaking news" three times in the first fifteen minutes of their four o'clock broadcast with the closing prices on Wall Street. It seems like all of the signals that I have read about in terms of finding panic bottoms are showing up in print, on TV, and in general public. So indeed, this may be it. Perhaps it won't be today, but I do think it is close by.

How will I know if today was important? I think tomorrow will tell us a lot. We need to see some follow-through to the upside almost immediately, and I believe in a powerful way for this to work right now. It is very possible, due to the relatively calm volume of today, that the late bounce was just some short covering. In a real panic, I would expect huge volume. The Nasdaq volume was pretty heavy, but on all three major indices, the volume was much higher on 9/19. If real buyers don't come in tomorrow, then the possibility of more selling and more panic still remains, even with the historic oversold levels. In that case, we would have to wait a few more days for the real bottom to occur.

I am putting up my watchlist just for some ideas of possible plays if tomorrow turns out well. Some of these plays are reversals (mainly the ultra ETF's) but some look half-decent to me with support levels close by. My game plan is to possibly play a few of these that give me clear stop levels close by to their current prices. I do not plan on chasing things however. If you do decide to get long, you must remember to HONOR YOUR STOP LOSS LEVELS. This is not the time to mess around, and you don't want to get caught long in another panic move lower. Remember also that if this is the big bottom, there will be plenty of opportunities to make money. Patience remains key.

Good luck tomorrow. Here is my long watchlist in Telechart.

STSI, BXS, UBSH, JOSB, REV, CRD.B, FMCN, THFF, SYKE, HEV, GTXI, LPHI, RMG, SQNM, PSS, UYG, SPTN, CSR, USD, THOR, ROM, TWP, MITI, CLNE, FSYS, UYM

1 comment:

Anonymous said...

Loosen up on stops is the way to go if one is to play in this volatile environment