Day Trading – The Bullz And Bearz

We Just Saw The Best 20 Sessions In Stock Market History

April 4th, 2009

That’s right folks, you have just lived through the 20 best sessions for gains in US stock market history. Even as I sit here in my bear fur coat – not seriously – I still have to admit that it’s pretty incredible. You know they always say that the most money is made right at the end of bear markets. Now, I am in now way saying here that this bear market is over. I actually of am the opinion that we have just started a very – again very – long term bear market. One that might last years not months. Okay, now that I have congratulated the bullz for their gains, it’s time to get realistic.

 

I have spent the last couple of hours here tonight going over chart after chart. And everything I am looking at is running up against multiple overbought indicators as well as major indicators. Let’s just look at a couple, starting with the NASDAQ for a change. Below you can see that we have hit the underneath of that ascending trend line almost exactly. What you also don’t see on this chart is that we have also run up against a very long term Fib fan level at the exact same point.

 

 

To go along with my bearish feelings, here is a look at AMZN. Not only has this stock gone up nearly 100% on this move, but it’s hit a MAJOR resistance line going all the way back to 2007. I really don’t see why anyone would buy something like this now? The nearest support might start around $70 when this begins to fall.

 

 

Now onto OIL. I continue to feel that Oil is one of the best comparison charts for the markets in general. From the chart below you can see that it has had a huge pop during this rally – but it’s just that, a “pop” – and needs to start basing. You don’t have to have a degree from Harvard or MIT to see that the chances of Oil retracing back to $45 are higher than it rallying up to $65. Again, this is why technical analysis is so profitable – it takes the emotion out of trading and works off proven strategies.

 

 

And finally we have the financial sector – by way of the XLF. Not only has the sector gone up by over 60% but we have again come into major resistance around $10 near the Fib retracement level in purple. Again, I am not saying that this is going to roll over and go straight down- that would be unrealistic. But as with all trading positions you want to be on the side with higher odds or percentages right? So given how high the XLF has come and all the resistance so close above it’s head, the chances are higher for a reversal – even if it’s short term.

 

 

Wow, that was a long but needed post tonight. Members and I got into a handful of great shorts on Friday before the close. I have very high expectations for these shorts – i.e. profit targets of 20-40%. They will need time to mature of course but we are on the right side of the trade in all these positions. Believe me when I say that we are going to make money on these! I’m sure I’ll even be linking this exact post later on down the line when I have another “I told you so” moments. Memebers Only video will be going out tomorrow so there is still time to jump in! Now it’s time to go enjoy this great east coast weather!

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