Thursday, July 24, 2008

July 24, 2008; Closed all Positions

I closed all my short positions (QID, SDS and DXD) when the down hit -170 (11,462) on the day. I did this realizing that it's probably too early seeing as that wave B should last at least a day or two. But the 5min chart showed a bullish divergence, and it's possible to count a full 3 waves down from the highs yesterday, leaving the possibility that wave B is ending right now. I'm not trying to catch an absolute bottom of wave B, I just wanted to wait for some pullback to exit at a better position and preserve capital, and lock in those large profits I made all the way back from when the Dow topped a few weeks ago at the 13,100 area which is about a 1,600 point profit in the Dow alone (which is a 24% profit for double short ETFs).

Wave C of 2 should begin early next week. It should be a strong wave that sub-divides into a 5 wave rally. That will offer an opportunity to re-enter short positions at a better price in preparation for the next wave down.

Right now I have no positions in the stock market.


Anonymous said...


Long stox, short gold, long usd. Playing the wave C NOW. Gold is going into free fall very soon. USD turnaround looks promising. Will look to get short stox AFTER a good run-up in wave C. It might last throughout the summer into the classic September/October crash season. That would make sense from a time perspective. The so-called summer rally in a sentiment changing large wave C followed by a devastating 3 of 3 seasonal crash. That's my view as of this moment. All subject to change, of course. :-)

Good trading. Diver

Hey, post more of your great charts in a larger format! Miss them.

Todd S said...

Hey Diver,

Good to hear from you again. I've been trying to post larger charts but the blog's format keeps it contained. The only way to enlarge the chart is to click on it. I'm going to look for another blog format that perhaps widens the posts and photos.

With this morning's pop, it's quite possible wave C is underway. And I like you're thinking about the "summer rallY" everyone's doing cartwheels about. However I'm not so sure it will last into September. I was thinking more about beginning to mid-August. I'll explain more of why I think that in my next post, and I hope you'll respond with yours. I also need to get some counts up for gold and the dollar. Please feel free to email them to me and I'll post them for discussion (

Thanks Diver!