Tuesday, September 27, 2011

Another big gap... what's new pussycat?

We opened with a very big gap (almost 2%) and barely went lower in the morning. This means the Thursday-gap got filled, by means of another gap. It's the 7th big gap since the early August sell-off. Most of these gaps remained unfilled for at least 2-3 days...
Those who wanted to fade the gap, got fooled by Mr. Market (unless you had the patience to wait and pull the trigger in the last hour of the session). Not that we saw much conviction in today's action, it felt more like consolidation. Indices traded in a tight range until the last hour of the session. That's when price broke down for a quick drop (almost 20 points in S&P). However, the morning-gap didn't get filled, so bears not claiming victory yet. Hereunder the SPY 5m-chart:

As happened yesterday, tech was lagging the market (albeit only little). Small caps were actually leading today (for the first time in a while).

Gold and silver continued to move higher after yesterday's bounce. Oil joined the party (+4%).

Daily charts for DIA & QQQ below. DIA could just as well morph into a W-pattern or in other words, a double bottom. Time will tell... But it definitely takes a long time for this market to break down any further. If it happens, it should happen about now, before bulls get too confident.

I got rid of the SPY/ES-futures trade, basically for breakeven. Of course this was ridiculous, not having the guts to get rid of the SPY's at the right moment last week. But I did play some nice option trades of the open ES-position. Although I was too cautious, closing my last position yesterday. Holding overnight would have tripled or quadrupled my gains!
100% back to cash now and waiting for the next opportunity!

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