OVERSOLD?

The market sold off in a big way during the last hour, but we did not break below the Friday low (around 1044). The market is due for a bounce. If we break below the 1044 level tomorrow, you could look to buy more puts. If we move above 1065, we could be in for a short term rally. The trend is definitely down, but we are also getting pretty far away from the 50 day MA. I would still consider any bullish trades risky in these conditions. The easy money will probably come from setting up put option positions on the rallies or buying puts on the break of support areas. I still don't see any confident buyers out there. I sold most of my contracts into the strength of today's close. I will either buy more puts on a break of that 1044 short term support area (about 42 on the QQQQ and 9835 on the DOW), or I will wait for a rally to set up new positions. Like I said in earlier blog postings, I will often trade just the SPY, DIA, or QQQQ during sell offs in the market. If I do come across bearish patterns on individual stocks, I will post them on the blog. I don't expect too many great individual bearish stock patterns until we get a decent short term rally in the market...which could possibly come as early as tomorrow. The UUP (dollar index) looks like it could be in a position for a pull back. This could lead to a bounce (rally) in commodity stocks if the dollar does indeed pull back a bit. That doesn't mean that I am recommending bullish trades in commodity stocks. The trend is down which means the path of least resistance is still to the downside. If you do have bearish trades in commodity stocks, you might want to consider taking some profits off the table.