Tuesday, March 10, 2009

Bulls on Parade

Well it was definitely a day to be a bull. The shorts got squeezed and totally hammered. It really wasn't surprising to me to see this rally and I had been expecting it to come very soon since we have just been so oversold. You really gotta be a bit greedy to be initiating new short positions down here below 700 the last week or so. So have we bottomed?

We may have but who cares. That's not how you should approach it. I just realize that the odds are better over the next few months to start being more delta positive and long biased. I think Tuesday was more bullish than most rallies we have seen in the past 6 months strictly looking at internals and volume based indicators. We will probably gap up and have at least a 2 day continuation to retest the pivotal 741 SPX mark by week end. I think that will be your pivot point for the next several weeks to trade off of.

My guess is that we hit that resistance and sell off. How much? Again, who knows and who cares. Just be expecting selling pressure up there. I believe it is likely we haven't seen the last flush of the selling and will come back down to retest the lows around 666 (funny huh? lol) in the next few weeks. After this, I strongly believe we are in for a sharp and surprising intermediate term rally that could last months or longer and possibly send us clear back up to 900-1000 on the SPX. This is from looking at a longer term Elliot Wave theory structure and it points that we are nearing the end of the last wave of the bear market that began in Oct. 07. I will do a post this week regarding this theory to expand further.

For Wednesday, pivot stands at 708 and I fully expect a gap higher. I would simply try to go long on pullbacks to the 20 ema on the 15min throughout the day if you get the chance. Otherwise, don't chase. Trade safe.

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