The bailout plan was rejected -- it is unbelievable, and the Wall Street decided to sell everything to show how disappointed they were -- and the market crashed.
This was a life-time experience for me. Too bad I just decided to close my short positions (SDS/SKF) yesterday night and couldn't watch the market today. Technically speaking, the worse is yet to come:
- Neither the 1-month nor 3-month US treasury bill yield reaches the previous low, which means the credit risk is not deteriorated to a critical level that the government will act immediately.
- The volume of all major indices is heavier than previous few days but not as massive as previous low.
- FED didn't inject a penny into the banks or the market, which is dramatically different from previous few days. Nor did they cut the rate. This may mean they want to reserve the fund to an absolutely emergent occasion when the situation could be far worse.
The current economy and market condition, in my opinion, are once per tens of years. I suspect more and more often we would say, "this time is indeed different!" ... "oversold can be even more oversold.". It is tough to stay at either bulls side or bears side. What is ultimately important is risk control. My ideas are:
- Never to be fully loaded, not even to mention margin.
- Trust in the bear market. No wishful thinking.
- If there is no long puts or ultrashort ETFs as a hedge, a tight stop must be in place; ...
- ...otherwise hold cash.
Every rally is SHORTABLE, DO NOT believe in a uptrend ... it might be faked. BE PATIENT.
Finally let's take a look at my SPX daily chart:
Here is creekmm's chart:
and Master Chuxue's:
Let's see how it plays out.
Last week most wave counters were screwed by the bailout plan and gave up the bearish counting (at least adopt an not-so-bearish or short term bullish counting) as far as I know. Now it seems the power of nature is beyond the manipulation of human kinds.
A close up at SPX 5-min to see how bad the selling off was:
and the INDU which has the volume information:
Actually the Financial sector is relatively strong:
while the QID is probably the best performed bear market fund. As I analyzed previously, QQQQ is indeed weak. DO NOT LONG IT!
SKF is hopeless. Maybe I was right to close it. The last trade price was 114.30 which is way lower than it's indicative NAV 125.75.
Reference:
Temporary Open Market Operations for September 29, 2008, number of operations today: 0.
9/26 they pump a whole 6 bn, ...and then turned around and absorbed a whopping 4.5 Bn back.
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