Tuesday, November 11, 2008

This Market is Sooooo Frustrating

As of now, it looks like we will have another gap to open the session - this time down. The key levels of 900 and 1600 on the S&P 500 and the Nasdaq look like they will be broken right at the open. Normally, I would look to get short here but I just don't know right now. I hate chasing these gaps because every time I have done so, it has turned into a loss. Chasing gaps (as shown yesterday) has been a recipe for disaster. With today being Veteran's Day, volume may be a little light as well, which would make the trading even more volatile and unpredictable that it has been recently. Yuck. This is a market where basically to be successful, you have to get in positions a day before hand and then guess (successfully) which way the gap open will go the next day. I am not that good at guessing. I see myself not doing too much today. In fact, I think we're taking my son to Chuck E. Cheese to enjoy a day off and probably will be away from the computer for most of the day, which is probably for the best.

One observation I will point out is that watching the VIX today may give a little clue as to whether we will get a trend day down or if a reversal is setting up. There is some resistance for the VIX at its former trendline, which project today to around the 67-68 area. If it clears that today and holds that area without reversing, then maybe we are starting a new downtrend. If it can't get over that area, I still think we could reverse higher at any time, which is one reason I don't know about shorting right here.

VIX
Chart from Telechart2007, Courtesy of Worden Brothers, Inc.

If you are interested, here are the short candidates I will be watching today (if I watch at all). Most of these haven't changed and have been in the last two videos. You could always play the
inverse ETF's if you want, but even those are getting really crazy. For instance, SSO was down 4% yesterday, yet its supposedly tied ETF was up only 1.3%. Make sense of that. If I do take any positions, they will be smaller than normal.

Short Candidates: CRK, URS, RRC, MLI, CMP, GWR, OMG, HGT, HK, WIRE, EOG, GDP, SYNT, NBL, DMLP, FSTR, GMXR, KGC

Good luck today - common sense says we breakdown further here, but you know how often common sense has reigned in this market. We could close down 300 points or up 300 points and it would not surprise me in the least. Trade at your own risk and be careful out there.

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