Fun week ahead…

I was hoping that by postponing our weekend post until Sunday evening I would have something interesting to post, potentially regarding the bailout.  As it stands right now though, futures have just started trading, and are down inconsequentially.  The bailout wording is supposed to be presented later tonight, no doubt in time for Asia to benefit from it.

I don’t believe there is much to review as far as wave pattern, or current options as far as the markets are concerned.  We are in a wave 3 decline, and most likely a 3 of 3 decline.  As you can plainly see by the weekly chart, the trend is still down.

We are almost all expecting a rally of some sort at this point.  The bailout will go through in one form or another, and it IS actually needed.  Considering the wording as I see it thus far, it looks like the rally will be short lived.  However, Congress is being clever by leaving it open ended as far as the funding, keeping the random PPT rallies a very real concern for the bears.

Mole and I have been suggesting the people without the nimbleness required for day-trading keep plenty of cash on the sidelines to play with.  I, personally, have been trading a select few high beta stocks.  My current list accounts for about 10 stocks that I have been trading back and forth with a high degree of success.  You are all familiar with the list, BIDU, GOOG, CME, FSLR, CF, MA, LVS, OI, and CCJ to name a few.  As you can see, these stocks have been moving around 5% a day for a few weeks now, offering for some very easy profits so far.  Also, by focusing in on a select group, you tend to get a feeling for their movements.  You notice how the stocks move, in relation to themselves and the markets, allowing for you to get very good entries and exits if you pay attention.

CCJ…

Inverse H/S or break-down?

OI giving a nice entry at resistance here…

Entry @ Resistance here

And GOOG nearing that precious breakdown…

Looking for 350!!

Finally, the $VIX has given 3 confirmed buy signals this month.  I have noted many times that “it is often the second or third buy signal that is the real one.”  That said, the $VIX is fickle on the buy side, but this is the most CONFIRMED buy signals I have seen through my trading.  Since we have failed to get a close above the 9/17 close, this is adding credence that this rally might have some ground to gain.  But, this rally should be fierce and swift, as the abundance of buy signals is another confirmation that wave 3 down is indeed underway.

Buy signals galore!

I am really looking forward to this week.  I will not make many bets until the dust has settled.  I maintain that the larger trend is down, and strong rally or weak rally, we will see lower prices in the future.  The internals continue  to be weak and/or weaken as these “rallies” continue.  As far as classic trend opinions go, lower highs and lower lows constitute a down trend.  IF we rally with some continued strength, look for the elections to stop the rally dead in its track.  I don’t expect to see it go that far, but the government has been working very hard this weekend, and anyone can guess what we will see.   Tread lightly and keep your powder dry, plenty of opportunities await us in the near future.
Skål!