9 Sep 2008 Daily Charts

Yesterday I thought today could be a consolidation so I didn't add any short position this morning.  And I was too busy to watch the market today, so I only got a tiny profit on my existing SDS and SKF.  After reading other people's analysis I had some bullish bias yesterday I thought the Wall Street would set us up and push SPX to 1280+.  However the situation is not complicated.  The market simply sold off, again and again.

Here is the SPX 60-min chart:

We are in 3 of 5 and I expect 1200 is broken out after 5 of 5 is finished.

XLF 60-min chart:

Both the momentum and volume pattern look bearish.

SKF 60-min chart:

Now it seems the down trend has been reversed.  I plan to buy on dip.

INDU 60-min chart:

Take notice at the TSI and Chaikin oscillator.  Most likely a bigger selling-off is coming soon (at least not ending soon).

SPX daily:

Very likely SPX will go further down.  We are now in 3 of 5 on the chart, and the final target of wave 5 is around 1120.

SPX weekly:

I am not entirely convinced by the bullish falling wedge because it is inconsistent with the wave counting.  Anyway the chart says no long before ~1160.

I have decided to follow the trend instead of to be against it.

8 Sep 2008 Daily Charts

SPX: Should it go up a bit to 1282?

XLF: probably it is exhausted.

SKF: Not ready to buy yet.  I would rather to be safe than buying a falling knife.

QQQQ: very weak.

Response of Futures to the FRE/FNM Takeover

This weekend the news of FRE/FNM takeover was published.  Now the US dollar gapped down a bit:

This is expected because it is overbought in the near-term anyway.  Since the stock market is expecting to go up, the exchange rate between US dollar and Japanese Yen is rising too:

However, it should not last very long.  The bond market has a negative response as far as I understand because the value of US dollar is effectively diluted.

Treasury Bond Futures 60-min chart:

Treasury Note 5-Year Futures 60-min chart:

Treasury Note 10-Year Futures 60-min chart:

My conclusion is that it is probably safe to short the entire stock market over the intermediate to long term.  And the excess fund flowing out of the stock market will likely go back to the crude oil and other commodities.

俺师傅：非常时期当以静制动

无论是生活还是投资都应当有动有静。过动则如紧绷的琴弦，忙碌疲惫损伤元气；过静则如一潭死水，停滞僵硬中失去活力。

动容易做到，静却不那么好把握。要学会独立思考，静中思动，以静致动，从静中求得智慧。

股市作战攻城略地，决胜的要义在于此心不动，随机而动。毛主席作战着重敌我力量的对比，不以一城一地为重，以歼灭敌人有生力量为主。在力量发生变化的过程中，如果我方占优，要打大的歼灭战，不给敌人逃跑的机会，彻底摧毁敌人的意志。

当前股市处于非常时期，当静观其变，后发制人。不了解敌情就盲目出击是要不得的。过度交易或情绪化操作更是需要绝对避免的。

EWZ: it may drop further down

P&F chart:

Weekly chart:

No sign of bottom yet!

Daily chart:

$72.5 is a resistance now.  Later it is safe to short it everytime RSI14 reaches 50 and RSI becomes overbought.

Long-term wave structure:

Wave 3,4,5 on the weekly chart:

PLAN: Close the position as soon as wave B is finished (not started yet); short it.

60-min chart:

The plan is written on the chart, and the success rate is VERY HIGH!