Day Trading – The Bullz And Bearz

Getting Prepared For Next Week – OIL Will Lead Rollover

March 29th, 2009

Good early Sunday morning! As is typical on Sunday’s I am up at the crack of dawn sifting through all – over 300 – charts to get a feel for this coming weeks movement in the markets. It should come as no surprise but I think we should see a very modest pull back here very soon. Some people foolishly think that the recent moves by the Feb and Washington in general to step into the free market and try and “protect” investors and consumer is going to help send us into the next bull market. Well, it isn’t! It may take the markets on an artificial – but very slow run – over the next couple of months, but by no means is it going to start a 3-5 year bull markets. While there are a variety of reason, the simple answer is that printing money, propping up dead companies, and leveraging an already leveraged consumer is not the quick fix. Okay, now onto the charts.

 

I know that I probably won’t convice everyone that some things – not all – are very very overbought and should be shorted. There will obviously be those critics out there who only think in one direction – i.e. bullish – and well, how effective have they been these past two years? Still, I’ll try to build a strong case and sway them. As such, I have put together a couple of interesting charts.

 

As I said before this rally began, we needed to see Oil lead the markets higher. We got just that these past two weeks as Oil has been on a very strong bullish move. Notice on the chart of Oil below that the breakout from the flag pattern is starting to loose steam very fast. I think I even mentioned it that other night on a trading video that Oil would roll-over and it saw a 3.6% fall the next day. Good timing I guess. But this correction is not over yet. My target is still somewhere between $40-$45 or about $10 lower than where we are now.

 

 

Now looking at a chart of the markets (NASDAQ this time) you can see that we have hit the underneath of a major ascending trendline. These type of retracements back to the breakout of the flag or pennant formation is very normal. So everything who thinks we started a new bull market is going to be very upset when we start to move away from this area quickly. Again, retracements are normal – they are not however a new trend.

 

 

Here is just one of the couple dozen securities that I have on my radar for members to short. BEN has been following the descending channel for the better part of six months now. As you can probably already see, it’s due for another downside move – which would mimic the move Oil is likely to make soon as well. The chances of this falling to $40 pretty good with an excellent risk/reward trading set-up.

 

 

Finally, I just wanted to show the EUR/USD pair which I mentioned on the trading video the other night. I said it would be moving back down near the closest Fib retracement level, and that’s exactly what it has started to due. Notice the move in blue that I predicted. Happy Trading!

 

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