The Dow is down 160 points, the SPX is down 1583 and all the major indexes are off over 1%. Oil is exploding, up over 2 at 104.14 and Brent is trading at 116.14. Violence is increasing in Libya, disappointment here in the NFP jobs report and the 27 year low in the labor force.
The Momentum Change signals have been producing whipsaws for the past couple of months, even though they continue to be Bearish with out producing any Buy signals. It is clear that distribution is going on in the markets, volume expands on the down side, but I have been unwilling to leave new positions exposed without protective stop loss points. It is part of the discipline I encourage to prevent large losses and getting trapped on the wrong side of a move.
I have learned that each trade must stand on its own, although it is emotionally and psychologically abusive to keep entering a trade and quickly getting stopped out, then re-entering a trade at nearly the same price as the last entry.. But money management requires it. I feel that the the overwhelming Bearish momentum requires that trades be entered again to participate in what could be a decline to the 1225-1250 level.. The SPX is again below the trend support line established since 8/25/2010 and is trading on the trend support line established since 3/9/2009.
It may be that the market can rally again off these support lines, but the risk reward ratios favor again taking a position to profit from a sharp decline that has been building cause for 2 months. I am re-entering the same short levered ETF's that have been recommend previously.
Best To Your Trading!
Bill
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