Thursday, September 3, 2009

Nothing Changed; September 3, 2009

The market has done nothing since the selloff Monday until the last few minutes of trading today. Today's sharp rally at the end of the day tells me the "cheaters" and smart money know the big jobs report tomorrow will be good. On a short term basis it appears the market is falling impulsively, but it's not complete. A correction to around the S&P 1015-1020 is expected before the next round of selling. As long as last Friday's highs hold, I will conclude that the market is in the big wave 3 crash right now.

On a very speculative short term note: I can easily see tomorrow being a fairly strong rally day after a good jobs number on light volume right before the long holiday week and the apprehension of most people not wanting to be short going into a long weekend. So I expect a strong rally day tomorrow. However, as long as the market stays below Friday's highs, we should see very heavy selling resume early next week.

My positioning remains the same.

Tuesday, September 1, 2009

Wave 3 is Likely Underway, the Modern Day Financial Dark Ages are Here; September 1, 2009

Today was a horrible day for the market as good ISM and employment data came out yet the market sold off sharply in reaction to it. On top of that, NYSE had declining stocks outpace advancing stocks by almost 5-1 and almost 95% of all volume today was the to the downside. And speaking of volume, today's selloff was on monster volume. The selloff also confirms the momentum indicators' (MACD, RSI and stochastics) bearish divergence with today's weak close.

All this suggest a severe exhaustion to the wave 2 rally and a high demand to sell stocks, even on a good news day! Most likely the big wave 3 crash into a modern day depression is now underway.

My initial target for the S&P is to break 450 before the end of 2010, but it can possibly go much much lower. I am fully invested in put options on the SLV, SPY, QQQQ, IWM and XLF with most expirations occuring Jan of 2011 which gives plenty of time for the market to collapse.