Wednesday, March 5, 2008
Small Buy
Keep an eye on any break and close above 31.09 on the $VIX. If that occurs take advantage by shorting the market or buying an inverse fund. ON the other side of that trade it may be a good idea to purchase a small long position at this time with a stoploss below the nearest sell-fractal. In the case of the SP500 that would be 1270.05
I'm not trying to catch a falling knife here, I'm just looking at what could possibly turn out to be the bottom. The 1270 area is 38% retracement level from the highs and is also support of the 360 degree channel. So all I'm saying is "there is a better than average chance that 1270 support will hold." If for whatever reason it doesn't, I'm looking for a violent move to the downside.
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I think you've got this one nailed. We're going to see a familiar pattern, with some severe downside, giving longs a great bottom to work with. I'll be long DRYS (and when I say long, I mean a few weeks max), looking to start some X, adding to RIO, adding to T, and maybe a little PCP. GL.
Thanks for your vote of confidence. Check out my RedDirtTrader charts for the BRIC Trade. I think you'll like it. Very simple to buy off the Stochastic buy signal on the BIK but one must watch the perfchart closely to know how to take advantage of the trade. Brazil or Russia should perform well on the next buy signal. They are both commodity driven markets.
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