I Rode the Wave

And now I am off of it.

I am out of all my shorts here, all for wins, including long RUSS DXD (inverse, levered ETF’s), long TVIX (day-traded this for a win), and short COH GM TJX UNP, among others, in recent weeks, including SBUX V. 

My only underwater position right now is down less than 1% on CORN long, which I am debating holding as we speak ($35 is still the nut, errrr, stalk, to crack).

Whether bulls can sustain a true bottom here remains to be seen. But the Nazzy and Russell are both bouncing off their respective 200-day moving averages, which is a test you know I have been looking for a while now. I still see some downside risk due to a lack of a washout yet, and am considering the possibility for choppy, grinding action into the long holiday weekend.

And that is another reason for me to move to almost full cash here.

Simply put, it is time for me to cash up and reevaluate the tape after no drawdowns of any substance and a string of wins on the short side inside 12631 in recent weeks.

Sniper shorts are always on the move…

Here are some bullet points this afternoon of what I am seeing in the tape:

• I am still watching 1840 overhead on the S&P 500 Index. 
• Dip-buyers continue to show up at yesterday’s lows (and Friday’s) on the S&P.
• We have yet to see a super-spike in fear or panic selling, which is often seen at tradable bottoms.
• A few short ideas I am watching bear flag here: AXP NKE TGT V 
• The best-acting softs today: CORN SOYB WEAT 

The overhead supply we discussed yesterday at the 1840 area on the S&P 500 Index is playing out thus far today, seen below on the daily chart.

I still see leaders leading to the downside, namely the small caps, biotechs, and high growth Nasdaq stocks all with room to drop further before becoming very oversold.

I am still short biased, though trading around my positions to lock in gains for the sake of discipline and not letting the wild swings in this market adversely affect me.

It is important to remain level-headed in this type of market, especially, and not throw caution to the wind because it seems as though we simply cannot go lower. In reality, a true market correction, even within an ongoing bull market, can become wildly oversold before a tradable bounce or bottom ensues.

At any rate, I am not yet looking for longs here with the S&P below 1840. If bulls can pull off a stunning close above it then I would consider a few names holding up well as long ideas, such as the energy patch stocks I have previously referenced.

Some short ideas setting up again: DNKN F GM 

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In trading around this whippy market, I sold my triple-levered short Russia ETF, RUSS, above $20.50 for a few points of a win inside 12631 just now. I am slightly underwater on a corn long, and have a few other shorts on which have decent cushion on them.

I still think Russia is in trouble technically, via the RSX ETF, but with such a highly levered instrument in a volatility market I will protect wins tightly when I have them.

The major averages are apparently making stop runs in both directions intraday.

Stay nimble, until we get more clarity.

What are you trading this morning?

Yesterday afternoon we entered RUSS, the tripled-levered SHORT ETF for Russia, at $18.94 inside the 12631 Trading Service.

We are trimming into strength this morning, as Russia is not only back in the news but the technicals for the RSX, Russian ETF on the long side, continue to deteriorate.

On the daily and weekly timeframes, below, respectively, note the potential to move lower yet to the lower Bollinger Bands.

Given the prior steep downtrend, heretofore, I would also not rule out a crash event before arriving at a real bottom.

That said, trading a triple-levered short ETF for the country of Russia is adult swim, which is why I am scaling into strength and trading around it.

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The updated DBA, ETF for the soft commodities, is very close to clearing the $29 hurdle to the upside. The daily chart shows a clean consolidation after a potent advance earlier this year.

Here are the top components.

Which ones do you like best?

Top Ten Holdings

Sugar #11(World) Jul12: 13.36%
Live Cattle Futr Jun12: 12.68%
Corn Future Dec12: 12.17%
Soybean Future Nov12: 10.69%
Cocoa Future May12: 10.05%
Coffee ‘c’ Future May12: 9.52%
Lean Hogs Future Jun12: 7.64%
Wheat Future(Kcb) Jul12: 6.38%
Soybean Future Jan13: 4.66%
Cattle Feeder Fut May 12: 4.54%

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