S&P 500 forming “W” Bottom ?
Ultra S&P 500 ProShares, (S&P500 2-to-1), 6 month chart
chart courtesy of FusionIQ
>
Watch today’s volume –
As seen in the chart above the 3 heaviest volume days (highlighted by green circles) in the last two weeks on SSO (Ultra S&P 500 ProShares) an ETF that seeks daily investment returns that correspond to twice (200%) the daily performance of the S&P 500 Index, were on days the index finished up in price.
This suggests accumulation and could suggest a complex bottoming formation is occurring, particularly
when one looks at the recent extremes in sentiment data.
A minor downtrend line (red line) comes into play near $ 31.90. Above this level would suggest that the SSO’s are indeed forming a “W” low here. Only a high volume break below the 52 Week lows would turn the technical picture decidedly negative again.
October 24th, 2008 at 1:34 pm
I don’t deny that this could be an *interim* low, Barry…but high volume does not correlate to bottoms in crash-scale pullbacks. Just go look at the bottom in 1932 — volume was nearly non-existent then.
~~~
BR: I am not saying this is THE low — just A low.
October 24th, 2008 at 1:38 pm
I still think that an intermediate term rally is coming soon, but we’ll probably need an “Art Cashin” washout first.
October 24th, 2008 at 1:44 pm
The real question is , being long sort of implies you are not worried about the scope of the currency crises that are unfolding but yet to reach a crescendo. Why?
~~~
BR: What does one thing have to do with the other?
; )
October 24th, 2008 at 1:45 pm
Barry,
Why do I need to remind you of “deleveraging”?
October 24th, 2008 at 1:45 pm
Hi Barry -
I’m not sure of your data. Here’s the most recent three high volume days on SSO according to IBD:
10/10/2008 $29.00 (-$0.70), vol=135,980,000
10/16/2008 $30.92 (+1.90), vol=121,740,000
10/23/2008 $28.56 (+0.03), vol=113,970,000
Moving average on volume appears to be 40-50 million shares a day.
To be fair on both sides, Oct. 10, SSO finished way above the intraday low, but below it’s previous close, while the Oct. 23 gain was hardly anything to write home about.
I agree with your general thesis that a W bottom may be forming, but the volume indications, imho, are mixed.
~~~
BR: Our chart is off of Bloomberg (i have no idea about IBD’s charts)
October 24th, 2008 at 1:49 pm
Hedge funds represent a field of land mines that we need to cross before the equity markets can recover. Just a hunch, but could we expect to see a continuation of this complex bottom for 6 months?
October 24th, 2008 at 1:50 pm
i could data mine any number of possible technical indicators for both the bulls and bears. i say keep it simple. but if you are looking, i’m following the gold/silver ratio. when it blows through 100 we will be close to a tradable bottom. it got to 100 during the s&l and this time is should exceed that by 10 to 20%. in any case we are just starting another leg up from the mid 70’s. look for another two weeks of fireworks to the downside.
October 24th, 2008 at 1:52 pm
Hedge funds represent a field of land mines that we need to cross before the equity markets can recover. Just a hunch, but could we expect to see a continuation of this complex bottom for 6 months?
October 24th, 2008 at 2:00 pm
Market can trot on sideway longer than our hearts can take it.
Making any kind of market predictions now is really hard ….I rather wait this mega shit time out.
October 24th, 2008 at 2:07 pm
How does decling volume into lower lows, make an argument for a rally?
October 24th, 2008 at 2:08 pm
HCF, the recent volume spikes in SSO are green indeed. http://finviz.com/chart.ashx?t=SSO&ta=0&p=d&s=l
October 24th, 2008 at 2:09 pm
slightly off topic but i need some advise.
i sold some puts (AAPL $35 strike, msft $10 and NVDA $2.50 strike).
the option market is behaving like all companies are going bankrupt.
am i getting in trouble?? is it possible that the market can go down 70% from current levels and stay there for a long time??
luckily i am still 90% cash. I think we may see more down days when recession causes earnings to drop in future quarters. Am i wrong?
October 24th, 2008 at 2:09 pm
Seriously, a bottom? Because TA told you so? Talk about useless. Why are you trying to lose all of your money BR?
~~~
BR: We use a very specific methodology that uses valuation, sentiment, trend, and technicals to time entrances and exits.
Over the years, it was worked very very well for us. Note how well timed similar calls were off of the lows in January, March and July this year . . .
October 24th, 2008 at 2:11 pm
Just stick with your scaling in and forget about the bottom predictions.
Also you might just consider scaling into SDS during rallies. Working great here.
TomD
October 24th, 2008 at 2:16 pm
Let’s effing hope so…
October 24th, 2008 at 2:16 pm
Given the last 8 years, a W bottom just sounds like something that will fail.
October 24th, 2008 at 2:17 pm
props to you for sticking your neck out here barry — but better you then me!
October 24th, 2008 at 2:24 pm
Indeed a very complex bottom formation. The market has been so bad that I think Barry is starting to hallucinate like a thirsty man in the desert seeing the mirage of an oasis.
October 24th, 2008 at 2:25 pm
We are in a massive deflationary debt collapse in the domestic economy.
A depression will accompany deflation.
Massive job losses, massive personal and corporate bankrupcies, massive foreclosures right on the horizon.
How can some one be bullish…..
October 24th, 2008 at 2:29 pm
The pattern also has the potential to be a consolidating triangle, and a breakout to the downside would be ugly.
October 24th, 2008 at 2:30 pm
In the days leading up to Black Tuesday, the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery.
Just saying…
October 24th, 2008 at 2:31 pm
although, after reading our post collectively, man wouldn’t it be the contrarian call of the year.
October 24th, 2008 at 2:32 pm
I’m holding back today. I expect a big bounce next week, possibly Monday. But the markets are going to drag in the gutter for a while longer.
This is definitely a bottomy area, but there will be no rocket recovery that is sustainable for several more weeks at the earliest. And that one will only be a juicy trade.
This bottom doesn’t have to be timed as precisely as those minor ones in 2007. Miss those by a day and you missed them for good. Today, if you miss the rise, then wait a few days. The market will be dirt napping later.
I’m still waiting for oil to bottom before really cutting loose, but I do have a buying plan in place for a couple of items. I’m going in at 5% to 10% increments on dips only. And the market has to feel like normal variation, and not an outlier event such as today. Also, whatever I go into has to be down at least 50% from it’s recent local high, not it’s maximum high. The latter objective is a pretty low bar in this environment.
October 24th, 2008 at 2:37 pm
There is no bottom for the greatest financial crisis in the history of cable television. All doom. All the time.
October 24th, 2008 at 2:38 pm
Actually, now that I think about it, a good reason to buy dips and sell quick is that the govt has a vested interest in propping things up to facilitate slightly more orderly hedge fund unwinding.
October 24th, 2008 at 2:41 pm
I am not a trader and I never had more than passing exposure to (or interest in) technical notions for equities, but valuations, deleveraging, the currency upheavals, the not-out-of-the-woods credit situation, and the general indications that we are headed toward a severe recession make me question some of your technical jibber jabber, Barry. The bottom could look like a “W” or an “L” or a “U” or a sliding slope straight into the darkness of hell, for all I know.
That said, the way the market is working, we will have your “W” bottom and a 200-point sucker’s rally at 3 PM and it will be over by 3:10 PM.
October 24th, 2008 at 2:48 pm
greatest financial crisis in the history of cable television
ROFL!
October 24th, 2008 at 2:53 pm
There won’t be a bottom so long as there are still traders trying to game it.
Capitulation will come when the bottom callers call it quits.
The financial funhouse of the last two decades is over.
October 24th, 2008 at 2:58 pm
I was going to buy the dips but CNBC has them all under contract.
October 24th, 2008 at 2:58 pm
Citigroup at $12 is starting to look interesting.
Wake me up when it gets to $10.
October 24th, 2008 at 3:07 pm
What on earth is the hurry in picking a bottom? Even IF there’s an upside breakout (and that’s really questionable at this point), there’s always a pullback to the breakout point. Real bottoms take quite awhile to form; no rush to be first, and tons of risk trying to be first.
October 24th, 2008 at 3:09 pm
Today’s market is absolute proof that the bottom is NOT in. GDP figures come out on 10/30, and I don’t think this time they’ll be able to use inflation to inflate the US’s results.
October 24th, 2008 at 3:14 pm
I share Dow4000’s view, (possible consolidating triangle with downside break, not Dow 4000, though.) I would like to see a close above 40 with stupendous volume before I would be interested in fishing for a trend reversal.
Maybe oil at $50/BBL, plus some better than expected news from the likes of F and GM, or some other beat up companies will mark the bottom. The bear case could be the freak show that occurs if the last leg down in housing could be as bad as some suggest.
October 24th, 2008 at 3:18 pm
DL..
you can sell strike 2.50 puts for citigroup for $0.42….why bother buying for $10.
option market is pricing bankruptcy for many stocks…
October 24th, 2008 at 3:22 pm
Whether it pops, or deflates at an even pace, at the end the balloon is flat.
The efforts by the Feds are at best going to keep the balloon from popping. But in the end the economy’s capital base will be largely destroyed.
What’s the opposite of a “virtuous cycle?” A perverse cycle? That’s what we have going on here.
All the king’s horses and men won’t be able to put this on together again.
SPX 700 or bust.
October 24th, 2008 at 3:26 pm
The pump is back the last 3 days.. just like old times.
or maybe just buyers below 900?
October 24th, 2008 at 3:30 pm
A “W” bottom would have a lower low than Dow 7880 and then a test that held above that low. Both the lower low and the test should be on lower volume and significantly more negative sentiment figures. Thus far, it seems to me, it has been the fast money and the leveraged money that has accounted for the decline. We still need the important money, the 47 million 401k accounts and pension funds to do serious selling.
October 24th, 2008 at 3:33 pm
wow – not one Presidential comment from the liberal elite here when Barry makes a post about a “W” bottom?!?!?! i’m disappointed in you guys… no one blamed the Bush Administration! maybe that’s a sign we are actually near a bottom – when the vitriol dies out…
in fact, i interpret the high volume up days differently here Barry – as people rushing in to chase rallys… I’m sure you’d be more confident of a bottom if we saw high volume DOWN days – a sign of a washout…
some putz on CNBC this morning was talking about S&P $100 earnings, and using it to explain how cheap the market was at a 9 P/E… huh!??!!? $100 earnings? when – in 2012?!?!?
October 24th, 2008 at 3:34 pm
Seems to this Dummy that high volume occurred on DOWN days, according to the chart.
October 24th, 2008 at 3:44 pm
Its a trade — it appears to be an opportunity to me, and I am taking it.
We lost a little money on the Cramer panic trade, and made a whole lot more on the Oct 10 buy — the QLDs were a 20+%.
Don’t get your panties in a bunch, I’m still over 50% cash.
October 24th, 2008 at 3:48 pm
Am I the first to write that Barry’s bottom calling seems disingenuous?
~~~
BR: Yes, you are.
Mark, there are 6,843 posts here — and a Google search tool. Its all publicly available, and all made in real time.
July Calls:
http://finance.yahoo.com/tech-ticker/article/39407/Wild-Times-on-Wall-Street-What-Now-for-Investors?
http://bigpicture.typepad.com/comments/2008/07/barrons-sentime.html
January:
http://bigpicture.typepad.com/comments/2008/01/cnbc-morning-ca.html
http://bigpicture.typepad.com/comments/2008/01/time-for-the-bo.html
October 24th, 2008 at 4:00 pm
Heavy selling into the close. Good thing 4 p.m. came when it did. What will the Feds do over the weekend?
What will Monday look like? Me-thinks it won’t look pretty.
October 24th, 2008 at 4:12 pm
Hello Barry & Friends,
I find myself in agreement with the Vermont Trader. ( & what a golden dump )
& could it be that a previous commentator on this blog was prescient when he prophesized the convergence of $Au and DOW at that magical # of 5000?
Oh Frabjuous Day!
( Of course it would require a carefully co-ordinated “October Surprise”.)
SO LITTLE TIME ( so many possible masturbations/conspiracy theories }. a clue: it’s even harder if you think that economics/market analysis is a science rather than an arrogant interpretation of the history of credit.
all you need is love
sounds silly, doesn’t it?
but………
Best of luck lads.
Respectfully yours….
October 24th, 2008 at 4:25 pm
Jeff M. @ 4:00:58 PM
“What will Monday look like? Me-thinks it won’t look pretty”.
Yes, if the Dow had been down 700 today, the market might have rallied on Monday. (These days, 312 points doesn’t impress). In the event that the market DOES rally on Monday, it’ll be a short opportunity.
October 24th, 2008 at 4:26 pm
Barry,
Some questions, please:
Is it possible that “capitulation” is happening off-exchange in the dark pools? What really happened last night to send the futures down? Is it possible that we will never see a classic capitulation in the charts because of the unprecedented volume off-exchange? How do you do technical and sentiment anaylsis when you don’t know the correct volumes, anyway?
Here is a happy conspiracy theory (for a change): Perhaps there is actually some leadership in the markets. Perhaps someone or some organization is actually stepping up and matching those who have to sell with buyers so we can have an orderly unwinding of bad bets without a massive washout. One can always hope…
October 24th, 2008 at 4:33 pm
S&P 500 forming “W” Bottom ?
Uh, BR? Next week, we’re selecting a new President and “W” will be out of there soon. Lets come up with a new term.
Like an O-bottom, perhaps.
October 24th, 2008 at 4:34 pm
It is all bad news longs…
1) Volume toady is not capitulation volume
2) 10 day MA on put call is all the way to 1.04…needs to get to 1.3.
3) Commitment of Traders again shows speculators are LONG S&P index futures…flat on Nasdaq. No excess of fear htere.
4) Dollar surging even more, further hurting foreign revenue for 4Q. YOU WILL HAVE TO TAKE 13% OFF FOREIGN REVENUE Y/Y AT CURRENT DOLLAR INDEX. Nasdaq is toast.
5) QID performed great today…surged at the close, up 8% on the day for a record closing high.
October 24th, 2008 at 4:36 pm
Hey BR, no matter you’re right or wrong these time, I only want to say you’re a gentleman, a very kind-hearted person! I want to thank you and this nation will recover one day. Be optimistic!
Cheers
October 24th, 2008 at 4:44 pm
It’s a trade — it appears to be an opportunity to me, and I am taking it.
We lost a little money on the Cramer panic trade, and made a whole lot more on the Oct 10 buy — the QLDs were a 20+%.
Don’t get your panties in a bunch, I’m still over 50% cash.
Posted by: Barry Ritholtz | Oct 24, 2008 3:44:02 PM
that’s what’s he’s talking about..
… I was surprised that ‘the Market’ held together, as well as it did, today..
This, BR’s, call may go down, with the 10/10 one, as Insane(-ly) good..though, longer term I think we have some real problems, and, ultimately, we’re going to wonder if DOW 10000 was just a dream..
October 24th, 2008 at 4:54 pm
It’s the Big W!
October 24th, 2008 at 5:08 pm
Mark, morituri, Primmer etc.
You keep publishing comments under different names, and I will keep deleting them and banning your IP addres. Your troll garbage is not welcome here.
October 24th, 2008 at 5:16 pm
BR:
Morituri — you constantly misstate my calls, post under different names, and IP addresses, and dont use a real email, address.
I have no patience for anonymous trolls. Come out from hiding, post your own calls in real time, and reveal your identity. Be a man!
Otherwise . . .
October 24th, 2008 at 5:32 pm
I agree we’re due for a bounce – but a bounce would require at least *some* good news. And we haven’t actually had any.
Russia holding a “going out of buisiness sale” isn’t helping any (for those who are wondering why we were down so much overnight). Too many people are making the LTCM connection.
But bounce or no, my money is literally betting on us hitting 600 before we again hit 1200. This quarter’s going to really, really suck for earnings – and the forward looking P/E computations that most people are making for S&P 500 are way, way too optimistic.
Don’t think it can happen? I was telling friends in September that we’d hit 900 before December – though I didn’t expect it to happen all in a couple weeks.
I’m buying into SDS, SRS, DXD, QID for daytrades, but not one penny for the ultralongs – the odds are just in your favor betting on down days right now. Long term retirement funds are parked in GRZZX and BEARX until 600 – and then I’ll reevaluate.
I’m up 50% on the year – it’s been like Christmas every day all month long. Too bad my day job’s probably going away before long.
Barry – if you’re going to call a bounce, you might want to specify the level you expect the bounce to go to – say, 1050? 1100? I find 1100 increasingly unlikely, though I suppose anything’s possible.
This isn’t over until house prices stop falling – and they ain’t near done yet, despite what you hear about inventory stabilizing.
October 24th, 2008 at 5:40 pm
I expect a relief rally in Asia and Europe on Monday because of today’s limited fall in U.S. That could trigger a rally in U.S. too, as stocks are now extremely oversold (VIX 79). But don’t expect that rally last more than few days.
October 24th, 2008 at 6:10 pm
Barry
You could be right but remember this is a derivative security. Also for the record and what its worth, that massive volume day on Oct 10 was a down day as it gapped down, rallied but closed at $29.00 down 70 cents from the prior day.
HD
Prudens Speculari
October 24th, 2008 at 6:14 pm
has The Big Picture become mediatic enough for this post to be considered a contrary indicator?
October 24th, 2008 at 6:16 pm
I can’t believe nobody has noticed this, or pointed it out, but the entire premise of this “call” is faulty.
You are talking about accumulation of a synthetic trading vehicle made up of a pool of short term derivatives (SSO) … what difference does it make who is “accumulating” it ?
It’s one thing to accumulate an actual stock, which puts in an actual bottom in something that actually forms part of the market. SSO, on the other hand, can be accumulated all day – people can trade that all the way up to double its actual value (quad long, I guess
and it doesn’t matter – it’s a synthetic stock that does not underpin the market in any way.
It’s like counting newspaper articles and “accumulating” the happy sentiment in them. It may have some correlation to actual market underpinnings, but its “accumulation” is not _part of_ those underpinnings.
October 24th, 2008 at 7:10 pm
Barry, I think it’s really generous of you to post what you are doing in the market. Thank!
October 24th, 2008 at 7:14 pm
yup just like the japanese still trying to form it’s complex for 20 years. rally here rally there and after 20 years down 75%. i expect much of the same from the s+p in terms of top to bottom.
October 24th, 2008 at 7:18 pm
Morituri,
Thanks for your contribution this evening. What do you think the odds are you go home alone this evening? I can picture your night now — red bull & vodka followed by red bull & vodka, and in the end, you alone in a cab thinking what could have been. But, hey, I’m willing to bet you have been there before.
BR — thank you for taking the time to provide what I believe is a valuable service.
October 24th, 2008 at 7:19 pm
To me, the negative sentiment of the markets feel how the upside of housing felt in California circa 2004.
You just couldn’t imagine that the directional move could continue much longer.
And yet it went on for 2 more years and 45%. It was insane. But if you believe that these markets won’t overshoot substantially to the downside you have a lot of faith in the ability of government to successfully intervene in this deleveraging process.
You have to take a good look at the Nikkei charts from 1990-1991. Look at that to get a sense of what could happen.
October 24th, 2008 at 7:22 pm
We all know we are in a recession.We all know we are in a credit curnch.Those things are yesterday’s news.The most important question is what sort of contraction in industrial output has already been priced in
by the market? I am a big beleiver that market is in “Inverse Nasdaq 2000 bubble” with irrationality playing on the downside.
Buyer for sure.
October 24th, 2008 at 8:22 pm
Please do not “accumulate” SSO -
All ultra ETFs are for daytrading only. They are not guaranteed 2x the underlying. SSO on high volatility down days trades at 2x the S&P 500. On recent up days it trades at 1 to 1.5x the S&P 500. If you bought SSO when the S&P was 910 the day before the crash 2 weeks ago, and sold it when the S&P was at 950 this past week, you would have lost 10% instead of making 10%.
October 24th, 2008 at 9:00 pm
Actually the 3 spikes correspond to those days in which Sarah Palin wore the $7500 shrink-wrapped red leather outfit.
SCHWING!
Adoringly,
Joe the Plumber
October 24th, 2008 at 9:15 pm
I’m with ya Barry on the short term trading bullish call. CNBC showed a very telling chart of bear market rallies in election years. November/December had some upward momentum in the two years they showed.
So we have gone from “no recession” to a “deep, severe recession”. There is a gap to fill around DOW 10000 in my eyes. SSO, DXD and all the double inverses are easy money from here for a nice 20% pop. Dropped too far, too fast. All we need is a couple catalysts to the upside and we’ll be off and running.
October 24th, 2008 at 9:34 pm
>> It’s the Big W!
>> Posted by: Buddy Hackett | Oct 24, 2008 4:54:04 PM
He’s just like your father: a stupid muscle headed moron!
October 24th, 2008 at 9:52 pm
Here’s another take on when there might be a bottom and what it will look like based on the end of past Crashes:
http://www.stockchartist.blogspot.com
October 24th, 2008 at 9:56 pm
wow – not one Presidential comment from the liberal elite here when Barry makes a post about a “W” bottom?!?!?! i’m disappointed in you guys… no one blamed the Bush Administration! maybe that’s a sign we are actually near a bottom – when the vitriol dies out…
Not so fast, I got a little dig in at around 2:15.
re: the market– If we don’t have the announcement of Banks and/or Nations going bankrupt Monday morning, I think we get a bounce to open. Admittedly, I think that bounce will get faded.
October 24th, 2008 at 10:01 pm
The Proshares Ultras *really* should not be used for this type of technical analysis.
They’re derivatives and have a number of statistical quirks that distort the price levels over time. (Unless you believe that the ultra is the “tail wagging the dog” and the primary driver of the underlying index)
Price levels over time on the Ultras are meaningless. A value of X on the ultra at two points in time will almost definately coorespond to two very different values of the index it tracks.
For an example of this, pull up a yearly chart of TWM vs. RUT. There was a clean series of tops at 760 on the RUT. Try picking that out from the long term chart of TWM.
Don’t do TA on the Ultras- do it on the underlying index!
October 24th, 2008 at 10:03 pm
Mark,
That’s not my point. Sure, a particular entity should not “accumulate” SSO, for the reasons you pointed out.
What I am saying is that BR is looking at a broad accumulation of that “stock” across the entire market place and treating it like it is the same thing as a broad accumulation of, for instance, GE or F or T.
And I am saying it’s not the same thing. Witnessing aggregate accumulation of SSO is worlds different than witnessing aggregate accumulation of GE. It does not matter what happens to SSO – SSO bottoming or topping or being accumulated is not the same thing as GE bottoming or topping, regardless of how linked the “prices” may be.
Example: Imagine if the daily swaps blew up in proshares’ face, or if the derivatives market got closed down for a week – SSO might do all sorts of crazy things that would _look like_ bottoms or tops or short rallies or god knows what, but it wouldn’t necessarily say a single thing about the actual market for actual stocks.
October 25th, 2008 at 1:34 am
Mark said:
All ultra ETFs are for daytrading only. They are not guaranteed 2x the underlying. SSO on high volatility down days trades at 2x the S&P 500. On recent up days it trades at 1 to 1.5x the S&P 500…
____
There are a number of common misconception as to how the Proshares work. They track 2x the DAILY PERCENTAGE move of the ETF and they tend to do this fairly reliably. There is no differential in tracking on up days vs down days. The discrepancies you see are due to two factors:
1) The Proshares close at 4:15 and the underlying indexes are marked at 4:00. This means any movement between 4:00 and 4:15 shows up in day X for the ultra and day X+1 for the underlying. This needs to be accounted for if you are checking the tracking on a daily move. If there was a big AH move during this period the Ultras will appear to not be tracking appropriately.
2) There is absolutely no expectation that these will track 2x on timeframes greater than 1 day. On the contrary, the nature of the statistical compounding of the daily moves make it explicitly improbabe that they will track 2x. (Pull up a spreadsheet and calculate it yourself). In general, the more volitile the underlying ETF, the worse the divergence will be. Proshares covers this in the 1st section of their prospectus booklet.
In general the compounding tends to automatically increase your leverage when the ultra gains in value and decrease your leverage when it loses value. This makes them wonderful swing trading vehicles as long as you do not hold them through multiple swings.
They should absolutely not be long term holdings as they will decay due to compounding effects over time.
October 25th, 2008 at 1:51 am
With the crowd fighting yu on this on BR, it’s got a higher probability of working that not working.
JT
October 25th, 2008 at 7:38 am
Friday’s volume was relatively light, observes John Roque of Natixis Bleichroeder, suggesting that fresh lows might be tougher to establish. Odds of a short-term rebound are good. The S&P 500 is 25% below its 50-day moving average, something that’s only happened five times since 1928. Each time, the S&P 500 has typically rallied at least 14%, says Paul Hickey of Bespoke Investment Group.
October 25th, 2008 at 8:36 am
Those volume spikes are goverments buying shares and as we all know…. goverments don’t make very good financial decisions.
October 25th, 2008 at 9:44 am
Well, it does seem to be a W formation given the facts, but it’s likely just a minor trend if we look at the timeframe of the pattern and the distance between the “high volume candlesticks”.
Honestly, I believe that we will have to wait a long looonng time for THE bottom.
October 25th, 2008 at 2:28 pm
Funny how everyone cheers Barry when he points out things he did a long time ago, and with everything plainly above everyone cheers for more.
But the support wanes quickly when Barry shows he is still a contrarian and calls something opposite of the crowd again.
Hint: This blog got popular by being ahead of the ball, not behind it.
October 25th, 2008 at 3:51 pm
Yes, if you are bullish you should short the SDS – bearish, short the SSO.
October 25th, 2008 at 5:59 pm
Just for the record, the SDS (opposite of SSO) also had similar volume spikes on the same days. So, you could also say it’s bearish or bullish depending upon which ETF you look at for the same trading condition.
October 25th, 2008 at 11:43 pm
Despite what some may say, technicals still have considerable sway.
Has no one noticed the pennant formation on the S&P. It’s not pretty. Not pretty at all. Anyone whose bullish should look closely at price action. Price closed on Friday BELOW the pennant flag, suggesting we may soon begin crumbling further lower. I shudder when I see what the pennant target suggests is possible (500ish? ouch!)
I trade what I see, not what I think – and definitely not what I feel.
Be careful out there guys and gals. Capital preservation should always be #1 for anyone with the guts to play these markets.
October 25th, 2008 at 11:53 pm
Barry, looking closer at your Ultra S&P chart (above)… I don’t see this as a tradeable bottom. It’s still bearish.
It’s a descending wedge-type pattern, and it appears from the chart that the last candle actually made a lower-low – which would support further bearish momentum – but perhaps not before it retests the red trend-line one more time.
I would definitely take the opposite trade and short this puppy on the next test of the red trend-line.
It makes no sense to me to go long here. This thing looks like it’s breaking lower. Just my 2 bits…