More Job Losses This Morning As Futures Remain Fairly Flat

April 15th, 2009

Morning all! After yesterday’s great sell off which helped rocket a lot of our shorts into some pretty good profit ranges, I’m really just expecting a kind of “boring” day again here. Futures all morning have been fairly flat and swinging between positive and negative territory. All in all, I spent the better part of last night looking through my hundreds of charts in search of some more great short ideas and found a couple gems I think members and I are going to get into this week.

 

Believe me, the more charts I look at the more I am expecting a very substantial correction to come in the markets. Everything from retailers to financials seems way too over-bought in the short term and due for a retracement of some kind before moving higher later on. And, the truth is that most of these short ideas have gone up over 100% in just the last month. If you think about the psychology of the investors behind these securities, they just made 100% very quick and easy and will absolutely be looking to take some money off the table. Remember the whole fear and greed thing – they are starting to fear losses and will be greedy enough to sell their holdings now at such high levels. This of course creates the opportunity for traders like us to come in a profit from their unloading.

 

Here is a chart of the DOW (which I also mentioned on last night’s Trading Video). As you can see we are right at the apex of the two resistance lines from the triangle pattern breakout in early Feb – or right around 8,000. Now, notice that the next support level isn’t until the Fib retracement level just below 7,400. With this in mind, I think the most likely outcome will be that the markets move down to somewhere around 7,500 – which is great round number support highlighted in blue here – before making another move higher. Of course this will take the better part of the next week or so to happen which gives us trades the time to make some money on the way down – like we always do!

 

indu

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