Wednesday, March 10, 2010

Up or Down from here?

So we took out the January highs this morning and the question that everyone should be asking them self right now is where do we go from here? Is it higher? Is it lower? Or do we trade sideways for a while? I wish I could answer these questions be it is hard to say for sure. Lets take a look at the charts.

Looking at the daily. You can see the uptrend from the March lows until late January. The uptrend was violated on 1/22 when we traded below 111.40 ish highlighted by the yellow line. To me it feels like the market is ready to go higher and as I mentioned in a previous blog, a lot of stocks have been setting up to break out or have been breaking out to the upside. I think that if we are going to continue higher for the next couple of weeks that we are going to need to hold the 114 level highlighted by the blue line in the 30 minute chart on the bottom left screen above. Now if we break this level it doesn't mean we wont trade higher, it might just mean that were not ready just yet.

Because of this uncertainty I will keep my stops tight and try to only have 1-3 positions on at any given time. And if we get much lower on the VIX I may look to either sell puts on the VIX or by puts in the SPY as protection of downside risk.

I am not making any market calls but I feel that the market wants to go higher and I will play accordingly.


  1. So I decided to go ahead and take that VIX trade that IWO recommended. Only I reduced the size from 5 to 3 and I got filled at 1.05 vs the 0.85 that he recommended.

  2. The VIX futures had a nice spike up today, so I took those short puts off the table and booked 33% of the profit. Market may try to come back. If we can take out the highs on strong volume that could lead to a low risk by expiration next week.