Daily Update: So, what now?

UPDATE 10:13am EST: I guess every bear out there is waiting for an opportunity to back up the truck – especially the kind of situation that tells me to be cautious. Berk and I are watching the tape carefully as we continue our bearish stance (for now) but we are also aware of the fact that today is the last day of expiration week, and evil things happen to transpire in the NYSE on expiration days. While you ponder that thought here are today’s RT levels – I trust everyone knows the drill by now:

UPDATE 1:30pm EST: I am showing some very significant divergences in some of my most trusted momentum indicators. Going back over the last few weeks I never have seen price move in the opposite direction of the direction those indicators are clearly pointing towards. Had a chat with Berk about it and we both agree that the only explanation is that the MMs are riding the market up/down. I know some of you are probably sick of hearing this, but we remain very cautious as we don’t enjoy trading ‘blindly’. Anything goes today – feeling lucky…. punk?

UPDATE Closing Bell: Berk and I have been daytrading the swings today – with very favorable results I might add. My apologies for being so quiet, but there really wasn’t that much to say. Just glad expiration week is over – my least favorite week of the month, as you all know. Not suprised to see the market rally into the close as we were miles away from max pain.

UPDATE 5:25pm EST: Some people here were asking me about market manipulations and I thought I post this for everyone to see:

I only call it manipulation when I see strong divergences on my indicator which in 99% of the time do not occur, and in particular if these patterns happen during the last day of expiration week. But I try not to blame anyone or anything – after all, if you expect manipulations, then trade them ! Or, if you suspect manipulations that interfere with your indicators then simply stay out and come back to trade another day. There are no excuses – a stainless steel rat adapts and prospers in any environment.

I think we all need to take a step back from the daily whipsaws, the hysteria, and all the tribulations of this market. Because on a medium to long term basis things are unfolding exactly the way Berk and I have been predicting for months now. Just go back and look at my charts from mid October – I predicted a triangle and a drop down. Which is what we got. Could have been a slightly different pattern, but the direction and magnitude were spot on. Actually, we both kick ourselves for not backing up the truck on Nov. 4th and then just holding until today or yesterday.

This is something I sent to Berk in an email yesterday evening:

“…on Nov 4th GOOG was trading at $360 – now it’s at $260 – can you imagine how much money one could have made on one option alone? The Nov 330P sold for $7.10 that day – today it’s worth $62.80. That’s one option.”

Food for thought? Berk and I are determined to quit getting caught up in the daily whips going forward. Remember that weekly chart I used to post? That should be our prospective as we push into 2009. More on that in the coming days – but expect that there will be changes around here.

Enjoy your weekend – I will post the weekend forecast sometime on Sunday. I might post a comment cleaner in the interim if the comment count gets out of hand.

Finally, a big up to Eric – hope he can continue his current streak in calling the market close.

Cheers!