If you were ever in doubt what capitulation looks like and feels like, squirrel away the memories and feelings from the last several days.
Going forward, I view the meltdown to be similar to an earthquake, where there will likely be a few aftershocks. The markets are in no way “safe” now that we have likely seen an intermediate term bottom, but I do feel that the Armageddon trade is off the table. What I expect in the near term is more of the same: volatility peppered with copious amounts of whipsaw.
On the chart above, the Dow rallied just above the 23.6% Fib line, and is headed for the area of 10,250, which represents the 38.2% retracement level. I will be looking for resistance a little lower than that though, as the Dow approaches the area of the lower channel boundary.
I would like to see the Dow cover this ground in a very short period of time. As I write this, S&P futures are up 2% 3%. Maybe Dow 10,000 can be hit tomorrow. Should it reach this level very quickly, I recommend taking some profits, looking for some shorts, or picking up some diETFs.
A quick message from Debbie Downer:
Traders should keep in mind that the Dow could go to new lows, after rallying and consolidating a while. With the worst stock market slide in history and a severe recession blanketing our country, always keep in mind the Dow 1929-1932 charts.
Debbie Downer would also like to mention that volume was above average today, but not phenomenol. Obviously, the sellers were exhausted during Thursday and Friday’s capitulation.
WHAOH WHAAAAOOOOOOOOHHHHHHH!!!
Mark Cuban is a fucking piker/loser/bear sucker.
Okay Fly. You must be watching CNBC or something. Sponge Bob is on here.
Wood … I enjoy reading your (smart) analysis, and looking at your charts.
TED Spread is 457 basis points.
Unless that declines soon, throw the damned charts out the window, we’re gonna retest the recent lows before 10,000.
Donny, Thanks. Do you know a good place to get real-time readings on the TED Spread and Libor? I’m assuming Bloomberg, but I do not like bloomberg and was wondering where else?
I use Bloomberg.
Wood
cnbc.com has it too.
have you noticed how those diETFs behaved lately. look at FXP and DUG for examples. Amazing. ScotTrade refused to allow me to place an order for FXP last week.
Born, that is insane.
It would worry me except that I’m usually 75% of the time, on the right side of the trade with them. When I’m not, that is what stops are for. However those gaps would have been ball busters.
whoa, that makes me think shoring the 2xs is preferable to going long the diETFs
Wood:
Talk about getting emotional…
I got into SDS and QID this morning. Was so happy to see a 3% profit in 20 minutes that I sold. Darn it! I must learn to let the system run.
Can I ask how do you manage to not sell too early?
Susan, I always sell too early, or too late. That’s why I have sworn off discretionary trading, for the most part.
The only way for me NOT to sell too early is to set stops, and go away. If I watch tick by tick (ticktarding, as we call it here, combo of retard and ticks 😉 then I almost without exception sell too early (or too late).
Still, a 3% profit is not bad! There is always the next time to practice discipline!
Wood, you NAILED me! 🙂 “Ticktarding” (LOL)!
Don’t let Mrs. Wood find out about this.
ha, nice 1 ^^^
lol @ Anton…Though Anton, be careful not to run off our female friends…We have so few of them around here!
Well, Wood, from the way the lady spoke of the experience, I’m sure she’ll be back.
I’m going to study your new creation — the one with the truly ingenious name — tonight. That thing is going to buy you a golden slide rule at this rate.
Between Big Bamboo and the PPT, I might just get back some of the money my mutual funds and hedge fund lost in my retirement accounts. {Chuckles warmly, shuts the door to his office, sounds of howling and breaking glass}
hahaha, good stuff on this thread tonight.
I missed the QID entry on the open and didn’t want to chase it, so I decided to “make do” with some puts on the Q’s, which are working just as well. Next time I’ll be more nimble at the open.
Smashing something sounds pretty good Anton, I have some cheapo figurines I want to get rid of anyway.
Unhand the Hummel, Boca. If the urge to break something becomes unbearable, I suggest tearing up a random brokerage office. They’re used to it by now. If the brokers are without eyebrows, you’ll know a fellow iBCer got there first.
From the way back machine:
http://www.youtube.com/watch?v=H8v1MVzIEMY
woody,
your system really did very well. i think this calls would also work with options. like instead of buying QID we can buy qqqq pu and it would have done equally well.
What is your suggestion or research on trading option with your call. Now that qqqq options spread are coming back to .02 cents and vix is slowing down.
Such a usefule blog…wow !!!!