Tough day for bulls when you realize ES lost almost half of its November gains in a single day. Support was clear at 1383, 61.8% for the month and bulls know what they need to hold. The VIX last week could not have screamed any louder and I guess someone finally heard, especially when coupled with those low equity pc ratio numbers. The selling actually started the day of Thanksgiving in Europe and Asia before any retail sales numbers came out. In other words, they were liquidating all US assets on the fall of the dollar. We had our silly little bounce on Friday, but today was the day of reckoning.
It's hard to say where we go from here, but my guess is many funds will use rallies to book more profits. Be prepared to do the same. We should bounce out of this, but resistance above could be pretty firm, namely SPX 1400 and NDX 1800. I am noting a lot of puts at QQQQ 43/44 and that could be supportive at some point, if not very soon. Just don't fall in love with anything.
We are entering a better trading zone with hopefully higher volatility and more technical plays as opposed to plain "buy any dips". I hope new traders do not think the past three months were the norm.
It's hard to say where we go from here, but my guess is many funds will use rallies to book more profits. Be prepared to do the same. We should bounce out of this, but resistance above could be pretty firm, namely SPX 1400 and NDX 1800. I am noting a lot of puts at QQQQ 43/44 and that could be supportive at some point, if not very soon. Just don't fall in love with anything.
We are entering a better trading zone with hopefully higher volatility and more technical plays as opposed to plain "buy any dips". I hope new traders do not think the past three months were the norm.
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on Monday, November 27, 2006 at 11/27/2006 05:55:00 PM.
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