UGLY
The only things bouncing on my screens are the Volatility indexes and they continue to shout BUY. Hard to believe one should be buying into this carnage but if you want to buy lower, well, this is lower. One other thing, who is more scared now the bulls or the bears (fear).
My oversold Naz breath indicators are the most oversold they have been since March 9, 06, October 11, 05, August 9, 05 and April 28 05. All those days turned out to be pretty good buying opportunities.
The VIX is back over the bar mitzvah level of 13 and has a 5 day RSI level of 80. Again, a Larry Conner's buy signal on the SPY when this level goes above 70.
So there are buy signals galore and as I said earlier, these buy signals usually work so hold your nose and dip into the muck. It seems it was a heck of a lot easier to buy a few days ago when the DJIA was spitting distance from the all time highs.
posted by DAVID at
11:01 AM
5 Comments:
The main pitfall with rubberband (beachball, QQQQ crash etc) trades is of course the Black Monday scenario: the selling never stops, bids are pulled and suddenly your protective stops are glittering like the receding sun on the surface as you sink, sink, sink. My "solution" is to go long NDX calls AND NDX puts simultaneously at roughly a 2:1 ratio. It's not perfect but it does mean that at some point in a megaplunge you actually start making money again. Theoretically :-)
I like it when people start talking about Black Monday.
Now if we can only get some folks on CNBC mention those words; And damn will we have a buy signal:).
Black Monday- I don't think so- We crashed in 1929 and 1987 and had a few other big down days. I like the odds of a bounce-
Re Black Monday: I don't think so either. Otherwise I wouldn't be net long NDX calls. But as it's THE killer scenario I do bring my security blanket to the game.
Due to premium loss, said blanket is admittedly less than optimal when faced with the "death by thousand cuts" (aka the "dribble of death") scenario but the dynamics of the modern market make that a low-odds outcome as well.
NDX bounce to 1670,eh?
Of course the truth of the matter is you don't need a fall on the order of magnitude of Black Monday to get hurt....
That said, I'm betting on a bounce.
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