Weekend Update…



Sometimes following your own forecast is harder to do then writing it.  I find that true this week, as I posted on last weeks' "Weekend Update" that we would probably go up to 1073-1076... and we did.  But, I didn't listen to my gut and follow Scenario ONE or TWO, instead I followed Scenario THREE and went short on Thursday around 1062... only to have to sell that position on Friday for a small loss.

Why didn't I listen to my own forecast?  Who knows?  Maybe because my forecast was based on logic and technical analysis's, and I went short on emotion.  This just go to show you that it's not easy trading... even if you make a correct forecast from time to time.  Your emotion will hinder your success untill you learn to control it.

I must admit that I'm not there yet.  I still let the outside noise in and react to it with emotional trades.  I clearly stated that Scenario THREE was unlikely, but I went short anyway.  Every chart I looked at had us retracing back up to almost 1080 to form a right shoulder, then dropping.  But, in the end, I'm still here to trade another day.  Let's just hope that I learn from this mistake and don't make it again.

Next week...

I'm expecting a few more days up to hover around that 1080 area.  We could see a down in the morning and back up in the afternoon day on Monday.  Then more up on Tuesday, but probably a flat close.  Wednesday through Friday should be more interesting as I expect more bad news to be released.  The difference this week will be that the market will be up against heavy resistance and won't be able to break through on that bad news.

So, I do expect selling to occur, and I'm still inclined to believe that we will hit 998-1000 before option expiration.  It will most likely come fast and hard, and could hit it before the 20th.  If so, you can expect a nice bounce off that level.  If you can keep a close watch on your account you could make some quick money by going long on the first hit of that area.  If could dip as low as 995 intraday, so be cautious... and be quick to jump on.

So, I'm looking to go short on Tuesday around 1080... if it makes it there?  It may do so on Monday as I expect another light volume day, which of course means another UP day.  But, my gut tells me that Monday will dip down early and rise back later.  That will squeeze any bears that went short at Monday's open, and get the rally up into Tuesday.

Ask yourself that question... "What would you do if you were a Market Maker"?  Of course the answer is...  Steal as much money from the dumb public as possible!  But how specifically would you do that?  I think a fake down move to tell the bears that "This is it", only to pull the rug out from under them later in the day with a rally back.

Regardless of how it happens, I'm going to go short again around the 1080 area.  I'm planning on holding these positions until opx if needed.  However, I think we'll hit at least 1020 before opx, and rally back into it.

Here's a little bonus video for you...




    • Interesting story to say the least… but, I don't think that the lack of bulls is going to cause this market to rally up another 100-200 points (SPX).

      This is probably because of massive un-employment. People just don't have money to put in the market. I'd say that the number will remain low for quite some time.

      When the market tanks over the next few weeks to months the percentage of bulls will still be low. Remember, sentiment is judged on peoples' feeling about the economy, which then relates to the stock market.

      People still are broke from the first market downturn early this year. Their 401k plans are now 201k plans. On top of that, if they still have a job, their hours are reduced, and overtime pay is a thing of the past.

      If you can't work enough to save any extra money, then you don't have any money to put in the stock market. Combine that with the fact that your neighbor just lost his job, and banks are handing out record bonuses from the taxpayers money… you have a lot of negative people out there.

      Trust is GONE! Obama lies every time he speaks, so does Timmy boy, and Bennie… When will confidence return to the market? When all the lie's and politicians are replaced with honest people I'd guess?


  1. Great analysis and posts, Red. I went short Wed (QQQQ at 38% retracement). As of Friday's close, it crawled past 50% and onto 62%. If it decisively closes above 62%, I will close. Otherwise, I'm sitting tight.

    • As I said in the post MS, I think we are going to about 1080 by Tuesday (or Wednesday at the latest). But, I think a morning dip on Monday is in order, so you might want to look for an exit point then?

      You could re-enter a couple days later at a better price. Of course if it's stock etf of the under lying qqqq, then time isn't your enemy.

      But, if it's an option, then you will get hurt on the reduced price because of lower volatility and time decay. Hopefully… for your sake, that's not a factor.

      Good Luck,


      • Thanks, Red. As you guessed my position is stock, so i'm not hit with the option decay. I can sit tight as long as there is no conviction to the upside action.

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