Tuesday

Big Move Coming

Post a Comment April 7, 2009 – 8:37 am |   | Permalink |  Print This Post |

It is anyones guess where markets will go in tonight - whilst a pullback is due before rising further, nothing prevents it further from going higher technically. Having said that, keep it mind that nothing moves up or down in a straight line. We have seen the DJIA move up steadily in March 2008 hugging the 5 day MA (often staying above it) on the daily charts. So if you wish to short the market (not unreasonable) in the safest way possible, do so when markets have gone berserk and is significantly above the 5 day MA. That way, you would stand a chance of making a quick profit even if it continues its uptrend. We choose to sit sideline having anchored our small $2/point short Dax (whilst maintaining a long $5/point Dax which is a medium term position). The McClellan Oscillator suggest that a big price move is coming - intuitively one would think it would be a DOWN. It is impossible to tell, the markets may need a big definitive  thrust up since it is losing its momentum upwards to suck more bulls into this. The fact that the Dow has technically confirmed an uptrend makes things more tricky. Many technical traders have entered a long position (hence pushing the market up in theory as a self-fulfilling prophecy) - but this would be a great time to rock the boat and take out all the new bulls onboard. Our silver call finally struck gold on second attempt - we expect more downside in the short term.

Today trading range should (at least) see yesterdays lows again, so if Futures decide to power up, it would be safe to short light. Very light. We would prefer to sit sidelines. After months of bearishness, we feel it is time for the tides to turn. Hence our net long portfolio.

The EUD/AUD continues to slide as our short making great gains from 2.0. Sit tight folks. If you have 2X your intended long term position (as we initially did), one may consider trading/exiting. Do not regret getting out too early and to chase. We intend to reshort if it goes back up. We are watching the EUR/GBP closely - we expect it to fall below 0.90, so hang tight (this is a good time to put a stop at our entry at 0.93-0.95). Derisk folks.