Market crashing? Relax to some Hawaiian Tunes
These markets that open already gapped up are useless. Bulls are so Paul-Pierce-like, they get scared and sell all their longs into every morning gap. If you take a look at the Dow, it has been doing horribly in 09. Just ask Danny, or read his newsletter. The Dow has closed in the RED about 21 times in the past 32 sessions, which is still a tad better than the Golden State Warriors record. NDX has done worse this week… down almost double digits.
Nevertheless, Monday’s selloff felt very “soft.” The bad news for bears was, despite a -3% uppercut, volume was light. The very bad news for BULLS is, is that I’ve explained before, you never want to get long (jumping the tape) on a bear-flagging tape (whether swing or day trading; ie, see my chart from yesterday’s post)… those bear flag NEAR the lows almost always lead to another flag lower, and you can discount volume at that.
… so for now, the correct side of the tape is to be bearish. To short on every rally and stuff like that. Do NOT enter new shorts here. There has been way too many distribution days this month, which is usually a sign that profit taking for bears is near.
That doesn’t mean we can’t be a Matrix-Bull. I feel we are in for a tradeable bounce very soon. However, what I would like to see is the market to start gapped DOWN, then buy into a rally attempt up. It will come. Just keep an eye out, keep yourself sharp, and be prepared to stick a dagger into an unsuspecting bear. Then when it’s all done, join their side.
I guess I’m still searching for a trade-able bounce in the same place: VIX < 51, and perhaps even more conservative, VIX in the high 40s. What I would like to see though is for the VIX to move higher then reverse simultaneously with a market that starts gapped lower then reverses up. That would be a proper correlation. When that happens, FAZ will be horse nuked.
I’m extrapolating the data from Monday’s intraday tape to use for swing trading. Don’t ask how.
-gio-
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oh, when i say tradeable bounce, I’m actually looking for an intraday squeeze. i haven’t made up my mind yet about swinging a bounce for now, the swing side is clearly on the bears side.