The Final Whipsaw on the sp500 Back to BOT Short

I am switching back to BOT short on the sp500 at 1266 for possibly a very long time (ie. most of the rest of this year).  The barrage of whipsaw signals during the last several weeks has been somewhat frustrating, but if that was the price to finally get it right with today’s signal then so be it.

The volume in the SPY today will come in very heavy and has me now thinking the entire consolidation of the last week or two was simply cause building for a busting of 1250.  I believe now that 1250 will be broken decisively and this market will not just be in a ‘mini bear’, but instead a ‘max bear’.

I also reviewed the longer term price charts and they are confirming the longer term bearish outlook.  I pointed out some of these bearish signs in a previous post but once again seem to have ignored my own advice and instead given too much weight to the daily action.

The interpretation and over emphasis of the daily action over the weekly and monthly action is still one of my biggest short comings with market analysis.

Having the ability to ‘relax’ and let the weekly and monthly signals play out is maybe one of the most important market analysis traits anyone can ever have… and I need to work on that because I still let the daily tape influence my mind sometimes more than the weekly or monthly tape.

So get your hard hats out… this bear is for real and we are in for a big extended retracement…

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10 comments on “The Final Whipsaw on the sp500 Back to BOT Short
  1. RMT says:

    Anyone who went long a couple of days ago got wiped out today. Today is a perfect example of why I’ve been so tentative about going long for a swing trade. There are too many negative macro factors out there to simply rely on chart technical. So seems like the news is important huh? The recent bounce looks like a dead cat bounce that created a bit of a bear flag and more steam to bust through to the downside. I reaffirm my bearish stance for the summer. I feel we will have choppy sideways to downward action on the markets. The 1250 is a very crucial level in more ways than one. If we bust through that level on heavy volume and CONFIRM on the weekly chart, then I would be very bearish on the markets.

  2. Danile says:

    Hi Tom

    Do you trade or you only analyze the market?

    I hope every time when you initiate a Long or Short signals, please set a target for that. That would be very helpful for the people who follow you, otherwise if they went long with you on last Friday at open, now what they should do? Sell at 1266?

  3. geoff says:

    I fear for my shorts now that you are short! Again.

    You were “crowing” a couple blogs back about your great bot long call of 17th June – – but it all evaporated – – and an additional 10 S & P points in the bargain.

    Your calls in June have been beyond horrible. I used to play a lot of squash and would very occasionally play against someone who did not have “eye / mind” coordination. The opponent’s eyes would see the ball hit a wall and rather than project where the ball would ricochet next, the opponent would rush to the spot where the ball had already hit. By the time the opponent was in position with his racquet to hit the ball where the ball had been a couple seconds before, needless to say the ball was somewhere completely different. Your calls remind me of such a rare opponent.

    I have no doubt, absolutely none, that you will soon change your market call again. It makes absolutely no difference that you foreswear making any other call for the balance of 2011.

    This site has been a perfect contrary indicator. I am very fundamentally bearish. If i had followed the calls of this blog since June 9th, i would have lost a whopping 62 S&P points!

    I would be shocked if you were actually investing hard money in accord with your calls. You are undoubtedly quite clever at setting up a website, but your analysis of the market is “off the charts”. You are exceptionally valuable as a contrary indicator. And this site definitely provides breathtaking entertainment value – – – so long as not real money is being wagered on this blog’s calls.

  4. Tom says:

    RMT this looks like a real bear to me now on the longer term time frames, and they take precedence over the day to day confusion.

    Danile I am only analyzing the market.. Sometimes I do go long certain index ETFS or inverse ETFS but I do not always act on any BOT long or short signal. If I do I will usually make a point of saying so.

  5. Tom Tom says:

    Geoff I have been correctly very bullish on the sp500 since September 2010 for almost 300 sp points… so your endless attacks on the recent cluster of whipsaw signals is nothing but a grain of sand in a big wide ocean 🙂 .

    And now I will be correct on maybe 100 SP points to the downside…. but of course you will not give credit to me when that finishes evolving either 🙂 .

  6. geoff says:

    I will be happy to give credit where credit due / when credit due – – – but NOT in anticipation of some future outcome which you claim will occur.

  7. Neal says:

    Tom: I sincerely thank you for the last couple of days analysis. Premarket 8AM I closed out my NASDAQ long positions for exactly break even. It was the right thing to do, even though the market is up for the day, even if it may have a pop higher from here. A good & serious trader like yourself, Tom, honors blowout points based on volume, support, resistance, long & short term charts. You were absolutely correct to set S & P 1281 as a blowout point. A trader to stay in the game has to conserve his capital, the most important goal he must honor. A few other lessons I learned the hard way 1) Never stay in a market after it hits your blowout point, not for even a day or two longer. Remember every day in a market moving against you erodes your working capital. 2) Don’t beat yourself up after you hit an blowout point and exit your position if the market would have made you money if you stayed longer.

  8. Danile says:

    Hi Tom,

    It’s 1283 for S&P, should I add more short??

  9. Danile says:

    Hi Tom,

    It’s 1283 for S&P, should I add more short??
    Is your BOT short signal still valid for another 100 points down??

  10. Tom Tom says:

    Hi Neal thank you for your thoughtful comments… Today was really a controversial day. I tried to sum it up in this post here. Days like today really make one wonder about who is in control of the market and show how deviant a beast the ‘market’ truly is… There are huge swing reversals that make tops, and huge swing reversals that make bottoms.. today had the flavor of a bottom.. but will need to see some confirmation tomorrow and next week..

    There are only 5 more trading days left for the June monthly candlestick, so the change over from June to July will be very interesting.. As I indicated in a previous post, July really needs to be a down month for this market to enter real bear territory.. if the market can catch its step again in the next 5 trading days and then carry that momentum upwards into early July, we could see a new up trend emerge again.. next 5 trading days are quite important.. and today seems like it was a big clue.

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