Friday, July 16, 2010

How is our Indicator doing?

We have been SHORT since ES 1070 and 1098. Just browse through our blog and you will see each and every day we have been strongly advocating Shorting for the last 4 days. 12th morning is when we started shorting and are currently sitting on a neat profit on all of our holdings, namely, ES, FAZ, DRV, SDS and TZA.

Is this story over yet? Without going into the technicals or macro-economics, just simply look at the above chart. We are clearly making Higher Highs and Higher Lows on this chart. Which means we are going to make a lower low than what we recently did on SPX.

Also note that the PACE of this advance/decline has been on the rise. Look at the angle of the first higher high line and the second one. BOTH, the duration AND Pace has increased. This is owing to the underlying volatility.

Bottom line is, We are going to make a NEW high and that NEW high will probably be dictated by the upper TL from the recent high that is parallel to the new lower TL with higher degree.

Things will clear out sometime in the next 7-15 days.

PS: I see a lot of folks saying that we are oversold and that things just don't go straight in a line and that we will see some upside moves. Since i just go with the above chart, all the ups/downs is noise to us. Unless the above chart tells us, we don't trade otherwise. The above chart has successfully tracked the Last to up/down moves ranging from 7-10% moves.
Adding to the above. A great analogy is "Climbing Stairs". When you are climbing, it takes a whole lot of effort for you to climb up. Climbing down the stairs is always with lesser effort and MUCH faster. Likewise, for all those who believe that we won't go down faster, please at a minimum have Strict Stop loss in place.

Have a nice weekend


  1. Jason
    Any bounces in between, for example at 1025 area, then down

  2. Reza,

    I blindly follow our indicators. What i post here is just one of the many (over 20 of them). NO automation. Everything visual. :-)

    If they say, sell. We just go with that. Hence, i do NOT have any set targets as such other than where i think this may potentially end. I am looking at 950 because that is the MOST logical point as we are clearly making lower highs and lower lows. Last low on ES was 1002, so that will definitely be broken in this leg down. Which will obviously take us to the next strong support which is at 950 only.

    Let's see how it all pans out.

  3. can you explain the difference between this chart and the one you posted on July 2nd? what is the timeframe for the chart? what is the yellow line on that chart means? how to tell the chart is up or down?

  4. There is NO difference. It is the SAME chart as July 2nd. Timeframe is 60 min, hourly chart that is. Yellow lines are TL's that are broken.

    "how to tell the chart is up or down? "
    Not sure what this means? If the chart is moving up, Short. Else go long the market.