Bull trap in the making?

Discussion in 'Trading' started by lloyd111, Mar 22, 2007.

  1. Heres a chart of the 2004 bear market/correction just to illustrate what COULD happen.

    Im not saying things have to play out this way..Im using it to show that just because we have a strong pullback up to the break doesnt mean its going to continue.

    Look at those daily bars... LOTS of strength there. So what happened?

    I see a lot of similarities here... of course I see shapes in the clouds as well :)
    #31     Mar 22, 2007
  2. wavelink


  3. #33     Mar 22, 2007
  4. duard


    I'm with you. I was a very vocal bear. Peruse my posts. Rode the downdraft May '06 and Feb '07. But I'm now riding the wave higher selectively with conservative strategies. I'm also at 80% interest-bearing instruments. If I see a dunk I'll go in short term and pick -up a one percent return without risking my whole nut. Blah, blah , blah
    #34     Mar 22, 2007
  5. doublea


    I was looking at the exact same chart too. I'm still long-term bullish but I would like to see the market go down to 65W MA to be 100% long. The recent high in bonds was in the last week of February, so I'm expecting the market to start its decline soon.
    High yield bonds broke their up-trend too.

    So many factors coming together for bears. If I'm wrong, I'll know by Monday's close and will take a loss.
    #35     Mar 22, 2007
  6. playing broken mo mo stocks is a dangerous game for rookies.
    #36     Mar 23, 2007
  7. I expected a weak pullback, and this was about as good as it gets. This is the last week of March and of the quarter, and I would expect some additional buying in the next few days. I would not be surprised if the June E-mini hit 1465 in the next week or so.
    #37     Mar 23, 2007
  8. The playing field is littered with broken mo's.
    #38     Mar 23, 2007
  9. I have decided to take precationary measures by buying puts for some of the stocks I own to factor in a possible repeat of Feb 27th. The problem is the Asian markets could fall again and cashing out on puts can help minimize paper losses.

    If the asian markets fall 4-8 percent in one session that would euqaal a 2-4% loss in the US indexes and a 4-8% loss for the stocks I own. Therefore, I buy puts at the approriate level.
    #39     Mar 23, 2007
  10. What I find disturbing is that put option contracts are so much more expensive than they were just back in January.

    Running a straddle or strangle is so much more expensive now.
    #40     Mar 23, 2007