Thursday, May 14, 2009


The most pronounced breakdowns occurred in the COMP (-3%) and the RUT (-4.7%). Based on the charts, these are breakdowns and it is time to make preparations to short. I do not know for how long. The COMP resolved it's indecision at the 200-day by confirming a move to the downside. The RUT lost nearly 5%, bringing death to small caps.

A lot of people say that a trend does not change in one day. I disagree. I've seen many, many trends change in a single day via breakaway gaps. Whether yesterday's move was a breakaway or not is open for debate. We'll know soon enough. I do know that the bulls won't give up so soon.

I am currently looking for retracements to at least the bottom range of yesterday's opening gap bar and the first sign of failure to go short and to sell my remaining longs. It would be unwise to simply short whenever you want to just because the market broke down. Don't get caught short into a rally. As you can see, the market is still 30%+ above it's March low so it's not like you're late to the party.

1 comment:

gatortraedor said...

John: That paper was only informational for you at the areas indicated--maybe just file away. Can't elaborate because the student hasn't published the data yet.