I shorted more VXX today via puts in the belief that we are about to see a bullish rally in the market perhaps into the end of August. Makes sense to see some end of quarter window dressing to try to salvage some mutual fund performance scorecards. I have to say I am quite surprised to see the VXX still so high up in the air given that we seem to be on a verge of a ‘scorched earth’ type rally.
We should see 1250 on the sp500 and 2600 on the Nasdaq. It is possible we could see higher than that per Edwards and Magee analysis that says the retracement rally of broadening wedges can go from 1/2 to 2/3rds of the previous decline.
There should be a much clearer picture by the end of August and I will be issuing a new ‘BOT re short’ signal around that time frame.
For those that missed the first chance to short this market, the market tends to sometimes give second chances and I believe that second chance is coming up in 2 to 3 weeks.
It would set up a catapult for a much larger decline into the typically bearish September October 2011 time frame.
The tendency after such a previous bearish trend is to be quick on the trigger finger and short much too early. One has to let the upside action play out as much as possible, let prices get comfortable with the idea that they are in a new uptrend.. but then when the indicators are ‘overbought enough’, pounce on the short side again…