Skeptical Bear Monday Rub Down

It was a good day for the bears, but yes, I’m a bit skeptical here. Why? First up we pressed against the multi-month support line but did not breach it with conviction – the bulls were able to make a stand thus far. Of course we could see a large gap to the downside and I’m sure that’s the trade many rats were taking today. But wouldn’t that be a bit too easy? Perhaps I’ve become a bit too paranoid – possible but you can’t survive in this racket without a healthy amount of caution. But the real reason why I’m still cautious here is the Zero Lite today:

What I see is a slight divergence here – is this really what we should see if we’re embarking on a big drop? I’m just not convinced yet. Maybe this is nothing and we’re in Primary {3} with more downside to come this week. Or this is yet another bear trap as suggested by Berk’s fractal as well as my Euro left chart this morning.

Program Trading Update:

evil.rat/ES: -2.5
evil.rat/NQ: -2.25
resident.evil/ES: -.75
resident.evil/NQ: -7.5
geronimo/ES: -11.5

A truly horrible day for all black boxes today. On the geronimo side we will implement a change that most subs will find very welcome as it contains the emergency parachute plus a tightened stop. More on that subject later – the new version will either be available tomorrow morning or on Wednesday morning. I will shoot out a message to all geronimo subs when the update has been put into production.

Before I go – here’s my take on the fractal situation Berk mentioned. The similarity in the pattern is quite obvious and if we bust higher then it’ll probably happen soon. The breach we bears want to see is marked on the chart – we need to see 1050 and even better 1040 on the SPX. Now that would be a drop that would be uncomfortable to the bulls – as it would probably trigger some panic selling. Today was a great step forward and if you’re not short yet, don’t despair – we are only 34 SPX points from the peak – don’t let greed get the better of you and base you trading on TA and not on ‘worried about missing the drop’.

Cheers,

Mole