Be Afraid – Be Very Afraid!!

UPDATE: 10:16am EST: Okay, let me attempt to visualize once more the type of tape we are facing in the coming days:

Close enough. BTW, this is an accurate depiction of the average market maker during OPEX week. Whipsaw galore – and if you ever had the pleasure of dipping your foot into the wrong end of a woodchipper then you know how trading this environment feels like.

Welcome to the chop zone from hell – actually, we’re not even in it yet but it’s already starting. Just watch – it’ll get really bad after we pass 749. There’s only two ways to trade this – long term or very short term (i.e. swing or day trading). So, pick your poison or – better yet – stay in cash and wait until we’ve passed this mess. I actually just sold some futures contracts and will hold them all the way through. I would not want to play this with options as I probably would incur theta and freezer burn at the same time.

Seriously now – there are many ways how this can play out. Maybe Minor 4 ended yesterday – maybe we’ll buld a triangle of some sort and maybe we put in an ending diagonal.  Who knows – we’re at the end of a Primary wave and anything can happen. If you are new to futures I usually recommend trading the NQ, but looking at the action in the $COMPQ and NDX I am not sure if that’s the right policy – it’s been acting… well…. difficult as of late – almost petulent. So, I’m am playing the ES (S&P e-mini futures) but remain in high alert mode over here. My exit zone is about the 760 area – if we push past something else is probably going on.

I know – I know – this is not a real channel – more like a gentle guide. But it’s worth observing that we are breaking the trend of higher highs and higher lows. I do think that the peak of Minor 4 is in at this point. However, if we consolidate and then breach yesterday’s highs our line in the sand is the 61.8% fib line around the 80 mark in the Spiders.

UPDATE 12:55pm EST: I swear – jing is a turd on OS X – keeps crashing. I have been trying to put this chart together for 10 minutes now:

This thing uses up a gig of memory on my system – I need a jing alternative until those wankers finally fix these problems. Anyway, this is looking either like a 3rd wave to me or the end of c. I think we’ll know fairly soon, as we have overshot equality with wave a. Either we drop down hard from here or something else is going on – the conclusion of the latter would most likely be the breach of yesterday’s highs.

So, let’s just see and watch the tape before we jump to conclusions. BTW, what the heck happened to DLTR? It was all going so well yesterday, dropping nicely and minding its own business and today this mofo shoots up like a rocket. I hate these kind of weeks and if it wasn’t for your Zero subscribers I probably would have taken the week off.

This entry was posted on Tuesday, March 17th, 2009 at 9:30 am and is filed under Intraday Update. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.