Issuing BOT Short Signal Right Now

I may be a bit early but I went short the market just now.  Things look a bit toppy and so far the reversal looks quite convincing.  I went long the VXX 17 October Calls and also the TZA ETF just now.

I am officially re activating the BOT short signal right now.

The volume analysis I did yesterday was quite concerning to me and today at least so far we have a reversal going which may be a strong signal by end of day.  However it has been the habit of this strong market to evade all reversal signals, but this time I think it might not be able to.

In previous posts you heard me talk about how the market is propped up right into last day of quarter and end of September and that likely the first day of October will start to see a decline.  It looks more and more that way and maybe next week is finally a down week to work off some of the overbought situation.

The gold price also as a leading indicator is way overbought and over due for a body slam to the downside to work off some of the frothiness.  The US Dollar Index has gone down almost in a straight line and is also overdue for an upside bounce, perhaps back up to its break down neckline.

spy20100930

If you look at the SPY chart above you can see that the SPY ETF today almost fully filled the gap going all the way back to May 2010.  That GAP back in May was on 345 million shares.  Today, so far at least we are pushing into that gap maybe only 250 million shares (just a guess, but the final volume figure by end of day will be interesting as a comparison against this 345 million share gap day).

I am advising caution on the long side now.  This reversal looks almost too perfect.  Filling an important gap right on the last day of the end of quarter window dressing and OCTOBER looms tomorrow…  It can’t be this easy right ? 🙂

Posted in Index Trading, Market Timing, SP500, Technical Analysis
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6 comments on “Issuing BOT Short Signal Right Now
  1. Geoff says:

    are your comments to be “faded”?

    it is troubling that you close with “This reversal looks almost too perfect. Filling an important gap right on the last day of the end of quarter window dressing and OCTOBER looms tomorrow… It can’t be this easy right ? ”

    i am definitely of the bearish camp but to have you in the same camp makes me nervous.

    good luck though

  2. Tom Tom says:

    Well if you were in the same camp as me by end of August there were almost 1000 upside s&p points to be had…. so that certainly was not a good time to fade me…

  3. Geoff says:

    I have watched your posts for about 4+ months and during that brief period, they have been incredibly conflicted – – from one day to the next. To take credit for steering your readers for a 1000 point gain is pure hallucination.

    If you want to take credit for good calls, it would be helpful to precisely indicate when you “buy” or “sell” a particular etf or stock or whatever. You very very rarely do that. You have conveniently forgotten the spectacular headlines you wrote about the various exceptionally rare astro aspects that were upcoming and now long gone – – without any discernible effect. It seems to me your calls on gold have been equally without benefit. If you have enough contradictory calls within a short space of time, one of them (or all of them) will eventually come true.

    Some examples on gold (title of post):
    Sept 14 – – Gold is Porsche and Stock Market is Dodge
    Sept 13 – – Gold Price Trend is Looking Suspicious
    Sept 9 – – Sold Gold
    Sept 2 – – Huge Move Coming in Spydr Gold Trust
    July 6 – – Gold Price at Major Major Top

    Some examples on S & P
    Aug 21- Weekly Confirmed MACD Sell Signal on SP500
    Aug 18 – Apple and QQQ Look Topping
    June 10 – 1150 before 950

    The first line in your posting of June 10th was “Maybe I should start to fade myself if I get too bearish”. That was on June 10 – – – meanwhile starting in July you had extensive series of postings about astro aspects and the coming crash.

    Your June 10th headline 1150 before 950 seems prescient. But in the period intervening to now, the postings have been all over the map. Should your readers now assume that 950 is in the cards? Do you want to take credit for predicting that 950 is now in the cards? Is a veritable crash now coming? As I am a bear, my leanings are obvious.

    You have a very difficult business, BUT it is incredibly unfair to take credit for having steered your readers safely to a 1000 point gain – – if so, will you shortly take credit for steering them to a 2000 point loss?

  4. Tom Tom says:

    I do not claim to pick perfect bottoms and perfect tops and I never claim to be a perfect market timer as such a thing does not exist. However I have been adamantly bullish on the sp500 since late August and I have repeatedly pointed out my volume analysis post that pointed this out ahead of time. I do not claim to steer anyone ‘safely’ to any 1000 point gain. But I do claim as showing a lot of confidence (although I was nervous at the time) towards a strong up move with plenty of confirmation along the way. I never use the word safe and market in the same sentence. Nothing is safe in this business. Far from it. As I recall, at that time you were very confident the market would continue to go down, so much so that you were willing to bet a chai that I was wrong.

    I indicated in a previous post that I would start putting a signal right on the sp500 chart that says either BOT Short Signal or BOT Long Signal or BOT Neutral. I have not done it yet but I plan to.

    At the end of August 2010 there was a BOT long signal and to be best of my knowledge (I still have to read through all my postings since then) I have not indicated any massive change in opinion or indicated a new BOT short signal except the one a couple weeks ago that got whipsawed.

    So NOW again I am issuing a BOT short signal. Write it down on your chart if you wish because I will do the same. and I am going to write a BOT long signal at the end of August (pending confirmation and auditing of my postings since then).

    Putting up a chart with BOT short BOT long and BOT neutral signals should clear up the air a little bit. Then no matter what I write in the postings between the signals will not matter, because the signals I indicate will be printed right on the chart, either right or wrong. Seems like a good idea.

    And NO, just because I issue a BOT short signal now does not mean I expect a crash or 950. I will let the market carry that decision for me as much as possible and adjust accordingly.

    As far as the contradictory calls in gold, maybe you just don’t understand the nature of trading or maybe you are more of a long term buy and holder. But the nature of trading to me is changing my mind *frequently*. I made some very bearish posts on gold when I indicated that ‘gold price was at major major top’ because there was real *possible* concern that a weekly bearish divergence would break the market. *But* gold managed to evade this divergence and then it led to me to *change* tack and turn bullish on gold, hence my follow on more bullish posts and my much more bullish posts after gold broke *above* the big rising wedge formation.

    A different approach would be for me to just be a perma bull on gold and ignore the possible bearish weekly divergence and also ignore the large rising wedge formation. That different approach can be successful sometimes, but it is probably more akin to reckless gambling since no caution or trend change analysis is being done.

    Admittedly sometimes my statements and headlines have been too strong, but I like to try to speak with confidence when I see a strong pattern. But then I also like to very quickly change tack 180 degrees when the scenario changes.

    I think maybe you are looking for someone who does not change his mind that much and just goes with the flow without changing tack too often. So maybe I am not your cup of tea.

    I will continue to change my mind a lot depending on what is going on in the market. Sometimes it may look like a historic top of epic proportions is forming. But then a week later the top signal can be eliminated and the market can turn and change to wildly bullish…

    Welcome to the stock market. 🙂

  5. Gooner70 says:

    Geoff.

    A quick glance at the charts over the past few months, would show just how difficult prediction has been, the price action represents the most extreme rollercoaster. I defy anyone not have shown variation in their calls during this time. Tom, like me, and like many other analysts amatuar and professional have been tossed around furiously in these markets. However, he sticks his neck on the line, and says what he sees, there is not much more that can be done than that. you don’t have to take his advice, you have the choice, but do not berate him, for willing to sat what he thinks.

  6. Arsen says:

    I agree with Gooner70. Does Tom change his mind frequently and with a dizzying speed? – YES. Are some of his call good? – YES. Bad ones? – YES. Overall, I have to say he has a good read of the market, and especially of the turning points.

    I’m sort of beginning to figure out how to follow Tom: flip positions as soon as he changes his mind and don’t ignore his current opinion and get stuck with his opinion from yesterday because the yesterday’s opinion fits your long-term view and you can’t change opinions that quick.

    Tom, I appreciate you starting to post your moves as soon as you make them.

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