Friday, April 3, 2009

State of the Market - 4/3/09

A day of resiliency today for the bulls on Wall Street, as a selloff for the first hour of trading was quickly reversed and the bulls refused to let the bears take control of the market. The market opened briefly higher, but then quickly fell and it looked like yesterday's late selling may lead to more. However, right before lunch, a sharp move to the upside was put in that took stocks back to their opening highs. They consolidated that move until around 2:00, when stocks tried to breakout to new highs for the day. They briefly were able to do that, but it didn't last. However, after another pullback that held support, stocks spiked a bit higher into the close and finished with mild gains. Volume appears to be much lower than yesterday.

I held my positions from last night (FAZ and SDS) through the morning spike and things looked good mid-morning when the market reversed. At that point, I moved my stops up a bit. When the market bounced, I was stopped out of FAZ at $17.40 for a 0.8% loss. Not a big deal and I don't like to let that ETF move against me too much. Earlier in the morning, I also added a QID position at $43.36 to get short some tech. As the afternoon started and the market started to move higher, I ended up being stopped out of the SDS ($70.98 for a 1.15% loss) and QID ($42.75 for a 1.6% loss). None of the losses were big so I am not too upset. I realized yesterday that these may not work out and accepted that. Timing is always the hardest part of shorting and I am not one that can just sit tight and watch my losses grow. I would much rather get out early and then get back in and that's what I plan on doing.

Overall, I am still looking to catch a move lower more than I am expecting a continuation of this rally, but for the past month, shorting has been a fool's game so I may need to reevaluate things soon. Maybe if we just move sideways for a week I will change my outlook. However, there are several things I am watching oscillator-wise that continue to make me think we are due for a pullback, perhaps a sharp one. In fact, many of the scans and oscillators I watch seem to be coming together here all at once, so based on those, we should definitely see a pullback soon. I will do my best to get a video done sometime this weekend showing these oscillators and scans, but there is still a lot of things move-wise that I need to finish, so I can't promise anything. Enjoy the weekend and take care.

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