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Going Down…

By Red, on April 27th, 2010

Bear-going-down-in-elevator

What a beautiful day it was in the stock market, as reality finally slaps some sense into it.  When bulls finally run out crack, they sure do come down hard!  It was certainly long overdue, I’m I glad to see it happen.  It gives us option traders the volatility that we need to make some decent money trading them.

Not that it can’t be done in a up market, but it’s harder to do as the time decay kills you, due to the market moving up so slowly.  The down moves are fast and furious, but don’t last long enough to make me happy.

Anyway, I’m looking for a small bounce tomorrow to get short again, as I closed out my put spread today around the first low of the day.  I missed out on a little more money, as it continued lower into the close.  But, nothing goes straight down… because “Down” is a bad word in the stock market, and “UP” is all that’s allowed to move continuously without dipping.  (Not really, but it’s sure seems like that).

Moving on…

Let’s just focus on the key support levels for now, so we know about when to bail out on our short positions.  Tomorrow is tough day to call.  The best thing to expect is a “pause” day, meaning that after a large sell off, there is usually a day that the market goes sideways, to slightly up or down.  That’s what I expect for tomorrow, but it’s not a guarantee as it could continue selling hard.  (The futures are about flat now, so that tells me a bounce is more likely).

Assuming there is a bounce tomorrow, I plan to use it to take another position on the short side, as I don’t trust any long trades at this time.  That’s because I don’t think we have sold off far enough to get a several day bounce in the market yet.  (Day trading is different of course, but I only swing trade).

So, the support levels going down are at 117.50 spy (horizontal support line), 116.25 (50 dma), and 115.00 (horizontal support line).  I expect the several day bounce to come in at either 116.25 or 115.00 level.  If we make it down to that 115.00 (1115 spx) level, I would expect a decent bounce.

But, we might stop on the 50 dma around 116.25 currently.  We just have too take it one level at a time for now.  Let’s not forget the fake print of 107.38 spy from last month, and the DOW 10,000 fake print Sundancer caught too, as that might be our final target, before a summer rally?

However, I don’t know if we are headed down to that area first, and then a rally into the May option expiration, or a rally into opx from a higher level (then the fake prints), and then a sell off to the fake print areas after opx is over.

Time will tell I guess…

Red

Same Old Speech...

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Uncategorized   Bulls, DOW, DOW 10000 fake print, fake print, futures, option expiration, option trader, opx, spy, stock market, support levels  
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