Tuesday

Tuesday Update

Post a Comment October 13, 2009 – 7:35 am |   | Permalink |  Print This Post |

We are expecting a big move since the McClellan Oscillator made another small change last night (and the night before). Our indicators gave a clue to the direction to this big move, suggesting a downward move - as usual we will only short if markets move up first. We have orders to short the Dax at 5850 again at $5/point. We shorted the Hang Seng at 21650 at $1/point (this may seem like a small position, but its the equivalent of $4/point of the Dax), whilst we wait for China to reopen after the break. It is up 345 points, 1.5%. This is more than China’s H-shares. If China opens down in the second session, we expect the Hang Seng to fall more. If China opens up, the Hang Seng may not move up much. Note this is a short term trade, hence we will protect our profits if we are in the money (or even take a small profit). As markets top, traders usually sell off before markets close - fearing to hold any long positions overnight. The rally is like a musical chair, everyone keeps dancing now but when the music stops…

As we summarise our trades for last weekend, it reminds us of how wrong we are shorting the Dax at 4900 and 5200 (positions left open and unhedged!). We are falling into the oldest trick in the book of making the same call and eventually we will be right. The Elliot Wave traders are now projecting pivots for the S&P at 1090, 1100 (and every 10 points up). As sceptical as we are with these numbers, they have an uncanny ability to stop a rally or decline right on the mark.

Europe is open for trading as we type. Dax is now 5781. Lets hope for a quick rally. Stops at entry for our short last night.

Hang Seng is now 21607. Stops at 21730.

Our longs in Agriculture ETFs at 6.07 have been timely, it is 6.25 as we type. If markets head higher, we hope this will buffer our shorts.