Tuesday, April 27, 2010

Index Analysis

The indexes took a serious beating today. From my count, this is the second distribution day for this current rally. The selloff we saw in the last hour really was very intense and i have not seen something this strong since the Jan/feb selloff and to be honest i was VERY surprised to see it. I was factoring in a correction to start soon as you are aware from my emails this morning and yesterday but i did not think we would see selling this strong so early. The portugal and greece downgrades coupled with the GS fiasco was just too much to handle i guess. From my experience, days like today usually brings in more selling down the road. Many leading stocks dropped down hard today and commodity stocks looks very poor to me especially the Agriculture stocks like POT<>
Overall, i will continute to urge caution. I took two long trades today which tus far are holding up okay even amid the brutal selloff. Looking back, it would have been a better idea to stick to my original call of CASH IS KING. But i am a short term trader and all my trades are taken to take advantage of short term bursts in price. I am not swing trader who holds stuff for weeks.
My only regret is pulling away from my FAZ positions for small gains so quickly yesterday. I am trader who relies on my instincts a whole lot and yesterday was the first time in weeks where i got a 'feeling' we were gonna rollover soon. At any rate, we are pretty oversold on short term time frames right now so i am expecting a small bounce or sideways digestion but most likely the selling will return probably sooner rather than later.
I will continue to urge caution and I would hate to see guys get "bored" and think that because you are in mostly you cash, that you are not being productive. CASH IS A POSITION! Just like going long/short is a position: CASH IS A POSITION. No one got hurt being in cash or carrying mostly cash. Protection of capital first, make money second....ALWAYS.


Blue said...

After today's quick drop and lack of double bottom on the RUT and Q's I'm going to start trading SQQQ. I can't short TNA and TZA in my opinion sucks. I need alternatives to FAZ and DRV, etc. for days like this. One sector will break down more than the others. Since it's one giant trade anyways, may as well get the most bang for your buck.

SQQQ, check it out my friend.

Stewie said...

SQQQ<< hmmmm, i dig! it's like QQQQ on steriods!

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