Closed out all Shorts on the sp500

Today I had to close out all shorts and admit this is the wrong trade at this time. I am cancelling the BOT Short Signal and now immediately switching to a BOT Long Signal at the current time which is 10:40AM Eastern time and a price of 1155 on the sp500. The market is too strong, the longer term time frames are winning out and assuming that today’s strength holds we have the potential for a bullish MACD histogram buy signal on the daily as long as we get a close above today’s high.  I am going long the TNA today at a price point of 48.54.

We are only a few days into October and we have BARELY created a bottoming tail on the monthly price candle.  This is telling me that the market is extremely resistant to selling off from these levels and tells me also that we may blast topside and bust the 2007 ultimate long term bearish down trend line.  I am getting a little bit ahead of myself, but this is how it seems to look right now.

It seems as though the last 2 weeks of price action was a ‘running correction’ which is very bullish because it shows the market is too strong to get a real correction going, it just keeps running while only a few stocks take some hits.

The final volume numbers today are going to be interesting and important because if they may start to indicate an entire character change of the market in terms of upside/downside volume.

Today is the kind of day that is painful, but at the same time very important in terms of the signal that is being given.  I must respect the signal and the market.

If this is indeed a topside breakout north from the 2007 bear line, it has the potential to be quite massive, because by definition a breakout north from such a long resistance channel line must show strong and robust price spread and also preferably volume as well.  More confirmation will be known in the days ahead, but I have to urge extreme caution on the short side at this time.

Posted in Index Trading, SP500
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6 comments on “Closed out all Shorts on the sp500
  1. shrihas says:

    Tom,

    Oh No……

    I have done exactly opposite not on S&P but on FTSE. Have shorted FTSE at 5651.

    Now, I expect blood on balance sheet. Let us see.

    I am in very very small profit at the moment and your posting is encouraging me to take very very small profit and run away…

    Keep up the good work..

  2. Geoff says:

    Your posting seems to make “obvious” sense. A couple days ago, I was concerned that you had entered the bear camp again and specifically when you said something to the effect that “it can’t be this easy can it?” Now that you have deserted the bear camp again, I am beginning to wonder if I should put on some more shorts or puts or sell some long into this.

    The gold market seems to obviously be saying that either world currencies are bunk (specifically the dollar) or that inflation is coming. It is tough to swallow that the Euro has risen so much. It is tough to have much faith in US$ when QE2 is supposedly around the corner.

    This is very tough market, but the more extreme it gets in one direction, I am guessing it will ultimately be in the opposite direction.

    I can see a strong case for the stock market to go up (along with commodities) if investors want to transfer out of currencies and into hard assets.

    I am staying bearish – – but admit that I may quite “easily” be wrong and pay for it.

  3. Geoff says:

    The slow STOC for today, up to 2:15 EST, has been consistently at or above 80, for the first 4 hours and 45 minutes of trade. I think this is very rare event. This observation is not much use since I can not recall what happens after such an occurrence. Sorry.

    My 10 moving average of Advance Decline was sitting about +15 last night but with today’s action will recharge up to about +230, but more importantly, the AD positive string was to 23 trading days last night, and if it recharges today than I am guessing it will continue up for another 10 days or so to make the positive string days exceptionally long.

  4. JR says:

    Don’t fight the tape. Today, I closed out my short position in RBCN, with a nice little profit and went long on RAX again and NBIX.
    Caution: as I have mentioned this market really is schizophrenic!
    It is very possible this market can turn down at any minute. Not all the indicators can be wrong. In the meantime abandon all faith that enter here and look out below.
    What I mean is be very careful, If and when the market shows that it is turning bail out FAST!

  5. Tom says:

    Yes guys today was a huge day, quite a sight to behold. It was a very key day today. Amazing. See my latest post for longer term thoughts.

  6. Tom says:

    Geoff I agree with you that it is a tough market. But I am realizing that it may be a market that is easier to handle if focusing on the intermediate to longer term trading time frames.

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