UPDATE 11:18am EST: Seems the permabulls didn’t enjoy my little taunt last night 🙂
I bought back my short positions (the futures) in the Zero account once we got that exit signal – fortunately early enough to exit with profits. Since then it’s been one wild pony ride – some very violent tape we got ourselves here. I knew that we’d get a rally today but I didn’t expect futures to first rally last night, then drop, then rally like wild, and then drop again. It’s been fun (not!) but thus far my account has taken it in stride.
I think we’re going to drop a bit more but there’ll be another rally attempt. There’s a big buyer lurking in the futures at least. Trick is going to be to pick the best spot for a hedge – breaching 857 today is probably not in the cards unless some trigger event happens. Watch the Yen folks – as any its weakness is being exploited in equities. Also watch the VWAP – we’re currently below in the index futures – if we rise above again it might get wild.
UPDATE 12:04pm EST: Some people were wondering if I cut my long term puts today: HELL NO! I said I’ll hold them throughout the plunge. Today is only a little correction….
Long term thinking people – long term thinking – that’s the key. Now sit back and take the punishment like a big boy (girl). You didn’t think this trip was a one way ticket, did you?
UPDATE 1:48pm EST: BIG Yen buyer just showed up – should have seen these candles. I think we’re going to see 860 after all – nice. Anyone’s guess what happens there. At minimum we won’t take it out easily – expect the bulls to make a stand there.
UPDATE 1:58pm EST: I reckon many of you are curious what will happen at 860. Well, take a look at this Yen/Dow futures correlation chart:
What are the probabilities that the Yen is going to keep pushing up? A few months ago I would have said – slim. But I have seen days in the past where the Yen’s stoch keeps doing the ‘dragon tail wiggle’ around the 80 line and just keeps going up. That big buyer scared the shit out of a lot of bulls just half an hour ago. So, my answer is: I don’t know! Based on today’s tape I think anything’s possible.
Either way – I like my account a lot better now than 2 hours ago 🙂 If nothing else hedging right here can lock in existing gains. If we really breach 860 with confidence then it’s easy to jump out. Expect some fireworks before the close.
UPDATE 2:40pm EST: I guess that buyer just showed up again. The bulls made their stand. 860 shall hold for now.
UPDATE Closing Bell: Today was painful to watch – we basically were going nowhere fast. Typical bear market consolidation day – they can be painful to bulls and bears alike. I’m not sure if I’m doing a forecast tonight – feeling a bit worn out and I need to atch up with some personal business. So, if I post one it’ll be in the evening and it’ll be brief. So, I’ll do a quick one right now.