How Much Of A Rally?

Discussion in 'Trading' started by Pa(b)st Prime, Oct 21, 2007.

In The Next Two Weeks.......

Poll closed Oct 31, 2007.
  1. All Index Markets will Assault The Old Highs

    13 vote(s)
  2. Only NDX Is New High Ready

    5 vote(s)
  3. New Highs, lol...We're In Crash Mode

    20 vote(s)

  1. they're pretty damm bloody for this time ...if you ask me ..


    also ..there is panic in carry trade land ...

    yen up over .01
    #11     Oct 21, 2007
  2. doublea


    Went long at the close, stop will be a close below 1500. target 1580 and 1620. Nasdaq will take all the markets higher.
    #12     Oct 22, 2007
  3. Cutten


    IMO no new highs (except Nas, obviously). Recent action actually struck me as bearish - no capitulation, instead a bounce that was enough to work off the oversold conditions and bring in new longs. If the S&P is going to puke 100-150 points, then it is going to do it as a grind. Any major selloff will spike the VIX, cause panic selling, and thus put in a bottom. So to go a *lot* lower, a grind is needed, along with plenty of moderate sucker rallies and go-nowhere periods (these will also make shorting tricky).

    A while ago I proposed that we might be in an extended trading range in the S&P, from 1370-1570ish. Monday & Tuesday's action fit perfectly into that, along with the recent selloff after the fakeout high around 1575. So I would expect maybe a 50% retracement of the recent selloff. That indicates a move back to around 1530-1540.

    So if the market rallies to there, pauses, then starts selling off and moves back below 1500, that'll confirm my view, and I would expect a choppy grind down to the low 1400s followed by a quick panic down to the old lows (probably a tad lower to freak people out). If the S&P moves beyond 1550 for more than a day or two, I would have to reassess my position.

    That suggests that buying puts when the S&P goes 1525-1535 would be the best bet.
    #13     Oct 23, 2007
  4. Cutten


    P.S. isn't the easy trade to go long Nasdaq, short S&P? That should make money for a few weeks regardless or market direction.
    #14     Oct 23, 2007