Monday, November 24, 2008

Bull Trap?

The bulls were off to the races this morning after the news of the Citi bailout. Shocking. The dollar took the news just as it should have with just about the biggest hammering of the year. Euro closed up over 400 pips, which is simply insane. Oil popped 5 smackers, and gold shined with a move clear back to 830 before retracing to 820. It seems like this market was going to roll over after about 2pm et but the bulls sent the shorts into cover mode and drove this SPX to 865 before it spiked down fast in the last 15mins. I did not think the last 15min candle was very inspiring to the long thesis so watch that 860 level Tuesday to see if we get a decisive breakout.

We have plenty of reasons for a multi day rally this week as it is deeply oversold and stochastics look bullish on the daily chart after the gap up today. However, resistance at 865, 880 and 900 is going to be very tough to break. Anything can happen of course but keep an eye on those levels. A downside break of 825-830 will be bearish in my opinion. While we are due for a continued rally during this holiday shortened week I would be cautious with all that tough resistance overhead.

I scaled into some SDS calls late today (which is a bearish position on the market) and will hold these until the market shows me I'm wrong. In the meantime how about that interview on CNBC with Prince Alwaleed? Lol, might have been the best interviewee ever on CNBC with the million dollar glasses on and cane while he sat in his gold plated throne. Lol, lookin on Youtube for it now.

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