Before Ben's speech
So, we made some money on our short positions. We had a clear target and we reached that level and performed an exit.
You must be very disciplined at trading, but if you play on the short side you must be absolutely disciplined. I had to learn this, very expensive lesson: trade as safe as possible, look what you made and not what you COULD make.
Will market fall further on? Will oil suffer decline? Most probably yes. Question is when.
I don't know what Ben will say. My best guess -as I told you days ago- is he is not in a position to announce QE or similar stimulus plan yet. Most probably he will give a promise again...
And market will do exactly the opposite than masses expect... I don't feel market will make a new high - not enough bullish residual volume left, rather a non-decisive sideways move or slight up move expected.
So, we made our covers based on our plan. VIX reached our expected level and we went out. It was the safe part. The unsafe part of bear comes now. I will try to catch a point where I see safe entry and clear bearish /bullish setup.
As you can see, VIX delivered a gap-down close via a gap-up jump. This gap up will be recorded by smarts and will be closed I have no doubts, the only question is when will they close this gap up. While short-term classic indicators show overbought status, slow classic TA indicators show no real trend on VIX meaning no real panic/relax.
Russel 3000 1D shows weakening short-histo and declining selling volume. Fakeout analysis still shows high level of bullish residual on oscillator. We have pretty high probability for a few days bull or sideways move. If internals will show high probability for bearish continuation, while that bull comes, I might re-load some bearish SPX position.
Russel 3000 2D delivered 4x2 days of selling bars, elevated selling signal on SBV, almost bear cross on histos, declining SBV oscillator and SBV outflow signal. Elevated selling signal is an immediate signal for selling all bull stakes, so going long now is not justified at all. However, taking bearish positions now is not recommended, as long oscillator still has bullish residual (on 34%).
Oil 1D delivered a nice MVO bull/bear signal. This is a very promising setup for oil bears. However, while market has high probability for a fake bull, I have no plan to load more oil short just now. It seems me that oil will drop further as cheap oil is a key for economical growth. Also, oil showed weakness while equities showed slight decline in the current bear cycle.
I would like to catch the safest part of the oil bear -if it comes-.
I prefer to tell you my trades a day in advance or before the bell and it makes bear side trades pretty hard. I might break this rule and will tell you if oil matured to be shorted intraday... For sure that will not happen today.
My proprietary short-term indicator system tells institutional money went out of oil and short-term oversold and oil is still too strong for a sustained (8-10 days) of bearish decline. Further weakness is needed for a heavy short-side price manifestation.
Dollar delivered our expected MVO bear bullish relief but nothing more. We have no confirmation on volumes for a dollar bull. My short-term system shows overbought conditions for dollar orders high probability for a decline on dollar for today. Maybe Ben will send wishy-washy message today will trigger sell-off but he will push dollar down in order to keep market in balance.
Trading update: Stay in cash. We will have 3 days to relax. I will move to a new apartment, and I hope I will deliver a nice week-end report for Labour day.
(C) 2004-2012 Deric O. Cadora and Atavia, Inc.
Futures and options trading is risky and not suitable for all individuals.