Gap Filled!

UPDATE 10:34am EST: That was a nice gap fill – hope you didn’t get hit by the tip of that whip.

Let’s see if there’ll be some follow through going forward.

UPDATE 12:04pm EST: I closed a few short positions which went from nicely profitable to okay profitable. This happens when you try to blog, trade, back test, get a quote on a new data feed, chat with fellow traders, etc – LOL. Well, after the gap down the buyers seemed to have taken control and thus far the YM, ES, and NQ remain above their respective VWAPs. The Yen has been falling apart and shows little strength – perhaps that double top someone mentioned is forming.

UPDATE 12:15pm EST: I find it interesting that Gold is not participating in the equities rally.

Is it possible that this line will actually hold this time? Perhaps three times is a charm when trading Gold.

UPDATE 1:30pm EST: What you are seeing in action here, ladies and leeches, is the Slope Of Hope in action. This is how it feels, smells, and looks like.

Investors/traders are frantic and are being herded from one direction to the other. Once they are completely wiped out, disgusted, and are vowing to never ever return to the stock market – then, and only then, will a new bull market begin.

We are not there yet by a long shot.

I would recommend you guys stay hedged and wait for critical lines to be breached. Thus far this starts looking a lot like the green scenario I described, although the rally was a bit more shallow than I expected. I actually really hope we get a nice juicy rally before we drop all the way. Would prefer to leg out of my hedge at the top, not at the bottom.

UPDATE 2:36pm EST: I’m liking BIDU and GOOG here as short candidates. Already got some puts on GOOG and am waiting for a little bounce to grab BIDU.

UPDATE 3:04pm EST: I’m glad I waited for BIDU as I already picked GOOG in an oversold market. Futures are trying another shot at the VWAP. If we breach we might get a late day rally.

FYI – if we rally hard from here we’ll probably complete a zigzag and hit 830. If we drop much further from here I think this might have been it. Of course various scenarios are possible but I don’t see much conviction by the bulls right now.