TheInflationist: Weekend Summary 220209
What a week. Last night we saw panic selling at the lows, as we expected and had hoped for. Not sure if that was the Knockout Punch we were expecting. We called for a 7275 turning point, and the low was 7240. Ideally, we would like the markets to close at 7275 to register a daily low on the chart. Now that it closed at 7365, we are still undecided if that fulfills our “knockout theory”. It is tempting for manipulators to push it lower on Monday to sub-7000. I know it sounds crazy to many to even entertain the idea of sub-7000 levels, but we need to be careful. Anything is possible and capital protection is key. Our entry level at 7950 looked low only a week ago. We foolishly held on, and now are compensating for it by our other profitable trades.
We will analyze the charts over the weekend. Our 7275 position is definitely not out of the woods. We will try to close $5/point (ie half) if markets go up Monday, and take some money off the table (this effectively lowers our effective entry point for our remaining $5/point long position). Monday could be the last flush down. So, if markets go up pre-open Monday (which indicates a down day as markets rarely move in one direction from pre-open to close – well, last night made an exception). By now we have been calling a bottom for 2 days. We expected markets to turn 19th Feb 2009 +/- few days. Shorting at this level is ridiculous in our views (although we said that 1000 points above current levels), and if you have a small losing position – hold it if you can take the pain to sub 7000. We are still hoping for markets to fall, which is our emotional-leverage indicator confirming that we are not over-leveraged.
We do not see any discrepancies at the moment. If you see any, feel free to enlighten us.
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