Friday, September 2, 2011

Friday 09/02: Big gap and down we go

Earlier today I posted why the market was falling. Except for the bad jobs report, we were also running into resistance on several charts and market conditions were overbought.
The pattern we're seeing on the daily chart is a 4-day island reversal. It's actually Peter Brandt that pointed it out. And I have to agree with his post, this looks very bearish. If he's right, we still have a long way to go (down that is...)

As for today's action, market was rather rangebound thru out the first half of the session. Then we gradually started grinding lower. 118 on SPY (1175 on the ES-futures) was a support-level in the first two hours. In the afternoon the level got tested again and broke on very heavy volume! In the last half hour buyers were showing up but the previous support-level proved to be resistance now. Heavy volume selling in the last 5 minutes brought us back near the lows.

Yesterday's buys are nicely in the green (up between 7.3% and 12.4%) and I moved my stops in the money, still giving the ETF's enough room for a possible pullback (very likely after today's action). I took partial profits on all four of them (not letting the winners turn into losers).
Today I bougth EDZ @21.77 with SL @21.00 (also half position size like yesterday's buys).

Enjoy the long holiday weekend!

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