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Thursday, November 13, 2008


so far so good

my short position stop-losses were all triggered in today's huge rebound rally. it ended up being a positive resolution in spite of being caught short two weeks ago, especially as i doubled down my (not very large) short position at almost exactly the top tick of the intervening rally on november 4.

was that a successful test? not really, but it might be close enough. one of the possible avenues for making a trading low is for the market to be driven down beneath important technical levels -- where plenty of stop-loss sell orders live -- forcing longs to cover with smart money taking the other side of the trade. that clears the way then for a rally benefitting smart money.

kevin depew may be irritated by the closing levels in the futures, as a daily demark countdown buy signal was foiled by too powerful a close. a spot of consolidation over the next few days would, however, clear that up.

the newsletter after the close further noted that today was very nearly/could be revised to a 90% upside day -- my data actually showed that it was one -- following a cluster of three (in the s&p) or four (in the NDX) 90% down days in six sessions. that's often seen at solid lows.

moreover, s&p 20-day new lows maintained their positive divergence, as did the mcclellan oscillator, as did volatility envelopes. in short -- there's a number of signals here pointing to a tradeable low in place.

yesterday's fresh lows in cumulative issues and volume are of concern looking further out -- this is still a very sick market, as attested by today's monster 11.8% range in the NDX -- but need not prevent a rally here.

much will depend on the character of the follow-through now. but so far, so good. some retracement of an auspicious kind would be a good long entry.

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