Friday, 20 January 2012

End Of A Surreal Week.


What a week! Let me accept the fact that I have not expected the last fifteen SPX points this week. I was ready for it in the 1st week of January but not now. Each and every indicator we can think of is stretched beyond imagination and if this logic defying situation continues longer, the retracement will be that much harder.

Throughout the day, I have been following the moves of AUD and at the end of the day, it tagged 100% of fib. extension. (http://bbfinance.blogspot.com/2012/01/aud-tags-100-fib.html )

It also developed a RSI divergence at the 240 minute chart which needs to be resolved. (http://bbfinance.blogspot.com/2012/01/aud-trend_20.html )

The late gain in SPX is correlated with the gain on AUD.

When everything else fails, we have to look at what is working and at this point only thing that seems to be working is the following analogy which I showed yesterday.

Let us see if we get the long awaited correction on Monday/ Tuesday of next week. A short panic would be nice. The original plan was to go long by the last week of January following a correction and go short in the 1st week of February following the top.  Depending on the price action in the early part of next week, I may close my short position, go long for a while and flip to short again.

Trading is not about being right all the time. It is about being right more often and quickly adjusting and minimizing the loss. While the retail has been absent in the current rally, the mutual funds have totally committed themselves and the available cash with the institutional investors is at record low.

The big sell off is round the corner but a higher high is going to come before that. I would love to take part in both. But will have to wait till next week for that.

Thank you for all your support and comments. Please share this blog in your Facebook / retweet to your friends. Have a nice and relaxing weekend folks. 
Posted by at

8 comments:

  1. Ringo20 January 2012 at 15:02

    have you already seen this:

    http://www.bloomberg.com/news/2012-01-20/demark-says-s-p-500-may-reach-1-342-by-next-week-before-falling.html

    ReplyDelete
  2. World of Finance20 January 2012 at 18:29

    Yes, I have seen it. Mr. Demark has moved his target from his last interview. But the fact remains that correction is due any time now. Monday or Tuesday at the latest. Without that correction, prices cannot move higher.

    ReplyDelete
  3. Ringo20 January 2012 at 18:50

    So at first a correction, then up to new highs and finally a sell off. How large do you expect the correction to be? down to 1300? 1290? or lower? Thanks for your great site...!

    ReplyDelete
  4. Anonymous20 January 2012 at 19:07

    Nice blog - thanks for your work. Interested to know your long term thoughts. I for one think sub-1000 levels in SPX are not likely in our lifetime. Hope I am wrong as I missed the bottom of 2009!

    In the near term given the stair step higher action, why wouldnt a blow off spike to 1340 possible? We have a fed meeting on tuesday I think. Thats just 2% away. That seems to be the path of most pain for everyone. Going long here is the most difficult trade... and most difficult trades are usually the best ones! Also, EUR/USD can spike to 1.32-1.33.

    TJ

    ReplyDelete
  5. Anonymous20 January 2012 at 19:40

    Any estimate on how deep the correction will be?

    ReplyDelete
    Replies
    1. Anonymous21 January 2012 at 01:23

      I enjoy your blog. Where do you post your open positions?

      Delete
  6. Anonymous20 January 2012 at 21:48

    DeMark was actually talking about 1330, not 1313

    ReplyDelete
  7. World of Finance21 January 2012 at 04:51

    I am expecting a blowoff top by the 1st week of Feb. after a sharp correction in January.
    In his 1st interview Demark set the SPX target lower than what he is saying now.

    ReplyDelete

Subscribe to: Post Comments (Atom)