I am enjoying a nice long trade now, but I am far from certain that we are done exploring the downside. Further analysis of the NYSE advance/decline line shows that we could still move lower. A -2200 day has never been a single day event. Wednesday was a -2200 day, but not Thursday. It is good for a tradeable rally, but it might not be good enough to call a bottom. If we can move past the 10 day sma, the next hurdle will be the 20 day sma, which I plan on shorting on a failure (YM 10420, ES 1211). For now, stay long, just trail your stops. The put activity next week could hold the markets up and even give us a nice bear market rally, but SPX and DOW are still below their respective 200 dma's, so play it safe and don't throw everything at this rally. There could be a real doozy of a sell-off the last week of October. I would welcome it as it would set us up for a fantastic bull run which could finally take us out of the miserable trading range we have been stuck in for years. Don't forget: the Feds will stop raising one day and the markets will love it and eat it up.
This entry was posted
on Friday, October 14, 2005 at 5:27 PM.
