Feeling Blue

I’m watching the index futures fall off the plate and unless some overnight miracle occurs it seems we’re looking at Soylent Blue here. Which could accelerate beyond that February support line if the futures market’s candles are any indication. This is the sticky point when it comes to oversold markets – 98 out of 100 times they snap back. But it’s those two out of a hundred that traders’ dreams (and nightmares) are made of. We may have ourselves such a situation at this point – today was a huge let down by the bulltards and if there is no flooring efforts by our federal friends overnight this thing could get ugly.

Anyway, quick look at the wave count. I originally had three counts with all types of sub waves and then erased it all as it would be of no value to anyone trading this tape. Rule # 1 for Evil Speculator: Only provide information that aid in decision making – everything else is purely academic and of no interest.

The way things are coiled up here I only see two directions – either this thing falls straight down tomorrow or we see a concerted effort to push this turd into a correction starting overnight. They have to – despite a heavily oversold conditions equities did not find much of a bid today and this could get ugly in a jiffy.

As I’ve said above – crashes or air pockets happen in oversold conditions. So, why do I keep presenting long evidence here? Isn’t this a bearish blog? Well – we are long term bearish – yes. But when I see extreme readings on various fronts I need to point them out as the risk in most cases is to the downside. I cannot anticipate crashes – nobody can – and trading them is a long term endeavor, which is why I keep telling everyone to hold on to your long term short positions – yadayadayada.

You probably don’t care about this chart – especially as we are expecting a gap to the downside tomorrow morning. But I’ll show it to you anyway. Despite today’s hard close in equities we painted the final signal leading to an equities buy signal. Yes, the last one was reversed, but it’s an addition to the growing collection of charts which tell me that we are oversold here. Do I want to be short term delta positive here? Absolutely not – but I don’t want to be short term delta negative either. When things get crazy as they are right now stick with the long term – don’t chase this thing down and don’t go crazy on the long side either as all we may get is a correction.

I hope you guys keep things frosty. Have seen some anger and frustration in the comment section and I wonder why. Just buy December or March puts and be done with it – I have maintained that for months now. The trading we do in between is simply to balance things out a little, which is why I am happy to take out small long positions when I see a good setup.

Whatever you do – don’t chase it! That’s rule #2 in the evil lair 😉

Cheers,

Mole