My rationale is that the downdraft into friday is much too overdone, more so than usual. I can be wrong, as I have been all day, and then we are in for a nasty monday morning. It seems to me that much hangs on the US. They are jittering over inflation, but oil is falling today in spite of an explosion of a pipe line. I am counting on a rebound there to take us up. The nasty loss for the day is 27.5 points, with a close at 1017.5, high of 1039.5 and low of 1015. Pretty much wipes away the accumulated profits for the period since the journal started a month ago, let's see if we can get some vendetta on monday.
Dead wrong, and we headed down another 22.5 points this morning! 6% down percent from thursday afternoon, I would call that a mini crash! We are up about 10 points from the bottom, and while I think I was a bit into wishing at the close on friday, not wanting to close out a such a great loss, numbers are more clear that we should head up now. But everything is probabilistic and I also feel that we have entered into an uncertain environment where there is a lot of fear, and a lot of talk about similarities with 87. Normally, I would step in to buy with abandon in such a situation, but having already bot and suffering some hefty losses, it is so much easier to succumb to the fear. So, I say to myself: "We have nothing to fear but fear itself. Stay long!"
Gold is down 4.5%, copper is having the largest drop since october 2004, the US dollar seems to start strengthening or at leat stop falling, and the US bond also...all those things that set us up where we are now when they were moving the opposite...I just wish I had not bot thursday so I could have plunged in now...ah well...next best thing is to hold. Oh yeah, and the web boards are extremely bearish this morning and talking about 800-900 soon in the index (currently 1002). And the leading business daily talks about PANIC on its homepage. When will I learn to always have ample extra money to buy these things....
And if I had waited with my entry, I would have been much stronger now, in case the rally does not start immediately. Todays close at 1002.5 and another 15 points shaved off. High of 1009.75, Low 995. Scary is that the cash index fell like a stone in the 10 minutes after the futures close, from about 1002 to 997.35. If we don't get a good rally in the US, which ripples through Asia tonight, there might still be a test of todays low in the cards...but that is tomorrow.
And the cash index is up! despite Asias trembling over night. Down a point in the futures but that is because we had a five point premium over night. Standing up against the continued downdraft in Asia is very good news. Holding for now.
We saw a final(?) downleg to 989, and then a high of 1010.75, before settling at 1001.25 for a loss of 1.25 points for the day. Was a bit surprised of the big drop back in the afternoon, but the US started to head a bit lower and a lot of people are nervous now so.. The US did not continue lower though but managed to finish about the same as when we closed. Asia should have a rebound tonight and these two factors should give us some morning strength. We should see one or two good days now, with different markets feeding of each other, but clearly this downdraft was something out of the ordinary, so its hard to predict. My best bet is for a test of the congestion around 1025-1030 within a couple of days or so, and then we'll see. Still holding.
After a good start with 6 points to the good, the market started heading lower to finally crash in the afternoon. Down 38.5 points on the day and the cash index even worse down 4.34%. During the last week we are down more than 10%. Threw the position at the market at 1068 and will now stand aside to regroup.
We continue to see wild swings, with the market first up over a half percent, then down more than 2% to 945.25, and then up to 971.75. Right now we have retraced to 964. And to think that we were at 1053.75 at the high of thursday just a week ago.... This might have been the final shakeout, but I am waiting a bit more now just to have the market settle down a bit, and we might see some more weakness before the US opens. Doubt that we will take out 945 though.
We have tested 945 both yesterday afternoon and today, and since it seems to hold and we have a positive open in the US, I have gone long at 1053.5.