Tuesday, March 13, 2007

Stocks: What A Day!

Last week I outlined my game plan as to how I was going to look to short the stock market. Basically I was looking to short when the SPY, QQQQ and DIA reached the fibonacci retracement levels. This is exactly what happened and I was fortunate enough to be able to short just a few ticks from the high of the bounce using the fade the gap method last Friday on the open. I couldn't ask for a better setup.

It's always good to look at time and price to get an idea as to what might happen. During the trend up from July 2006 to February 2007, almost all of the pullbacks were from 3 to 6 days. Now that the trend has turned down(50 average sloping downward), we should expect rallies ranging from 3 to 6 days and that is exactly what we got.The market rallied for 4 days and is now selling off.

Looking at the weekly chart, the long term trend is still up. So by analyzing previous weekly pullbacks we can get a better idea of how many weeks this sell off should last. I actually commented about this last week and you can read about it here. Let's see if there is more follow through in the days to come. It should be interesting!


Sandro said...

Maybe the time of April expirations could be something like a bottom?

It's still few weeks from now.

Kevin said...

I think April or May. But right now, let's take one step at a time. We still need to break the low from last week.

David said...


I am interested to know what trading platform you use. I read and value your blog. You are obviously spot on with the analysis so I figure you will have expertise with the actual platforms, too. Just seeking some sage advice so I get started in the right direction. I have been a student of TA for some time and feel comforatable enough to begin actively trading - small share size to begin with ;-)


Dave S.

Kevin said...

Hi Dave,

Thanks for the compliment but you're asking the wrong guy when it comes to trading platforms. I have an account at a major brokerage firm and I use them for all my long term trades. Nothing special.

Eric said...

great day kev, glad i got to ride it with you.
-David, i know you didn't ask me but for trading platforms. i have been looking to switch to either interactive brokers or 'think or swim'. both are for serious traders.

David said...

Kevin and Eric,

Thanks for the feedback!



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