eggbeangame

Hi chaps Been on hols with the kids and more hols next week Will be back beginning of Sept Good trading one and all EBG

closed +80

We corrected high and fast from the 10800 low – yesterday I see as a pullback – and from here (though open to the possibility we could yet go even lower to 11200-11300) up again, forming a zig-zaggy upleg from the low over the next few weeks. Open to the top being in the 11700-17500 zone or somewhere up at the 11900 zone, keeping eyes on the VXO/VIX for the signal to sell into a new fully blown downleg.

long DAX Dec 6496

Good call Foale

Looking for a top on this rally, the market snapped around the 11700-11750 level, which I now see as resistance. Looking back at the closest historical previous bear market – in the 1970s when commodities were in a secular bull run and the overlay of current chart on it shows strong similarities – rallies took on a span of around 1000 points. As we bottomed at 10800 this would be a max 11800. The volatility indicators have moved from just over 30 (when we went down to 10800) to just over 21 as at the end of yesterday. 20 and below is considered a good indicator to sell and we are fast approaching. Previous bear market rallies, although they can be fast and furious like this one, have often lasted a couple of months. I don’t expect therefore that we will go straight up to 11700-11800 from here, go sub 20 on the VXO/VIX and start a new down leg. I think we need a bit of consolidation in this upleg first – some pullback before we go up to those levels. Interestingly the next leg of the bear in the 1970s equivalent wiped off 3000 points off the DOW.

Apple and amex results

stopped out of my oil short at b/e - will look for another entry

Citigroup reported smaller than expected loss

Fortunately I changed my stance and decided to wait for it to decisively break out of its up channel before shorting it again. Am short since yesterday looking for sub $120. Have to be vigilant for 'shocks' though - am sure it won't come off in an entirely orderly fashion, but I concur with you in expectations.

Difficult but am also having to be neutral. Still in the down leg and not bottomed yet: We didn’t get the VIX/VXO spike that often comes with a true turn up from the low, nor did the VIX/VXO get to the normal levels. The DOW chart to me is calling for 10500 as a low – though I accept this could come in the next bear leg down, not necessarily this latter one. We are still in the down channel until we make a decisive break to 11500. -Or- We have reversed and are at the beginning of a bear market rally leg: We got up to decent VIX/VXO levels, if not the normal highs. We had a hammer on the daily, plus a second follow through up day, which is typically a sign of a genuine turn. Oil finally broke out of its up channel and commodities have historically sold off a year after stocks in stock bear markets, giving the stock indices room to breathe and a home for the hot cash too.

Is it a coincidence that all indices are tussling with 300? Dow 11300, DAX 6300, FTSE 5300 - they are all battling as I type. Is that a step to far at the mo?

Hi guys, Interesting reading from Zeal again: http://www.zealllc.com/2008/vxospx.htm The VXO can be tracked 15 mins delayed here: http://finance.yahoo.com/q?s=%5EVXO&d=t In short we're looking for a daily VXO close above 35 (got up to 30 yesterday) and then an intraday index plunge to take it to almost 40 (intraday got up to 33 yesterday). Short until that point, then long. We'll see if it holds good....

Yes Taz last time it was 11.30h UK time.

Agreed Phil, it's going to shift it, and I'm geared up on the short side in case we get the decisive plunge. But if it's not too bad then got to be ready for a rally. Difficult, as I'll be away from my terminal at that key time...

Hi Foale I see 3 possible scenarios on the charts: We are consolidating at the lows – typically bearish and can spell a further breakdown ahead (catalyst: any nasty surprise) We are printing a rounded bottom, a slow turn – these usually take a few weeks to form and will then release a move up We are making an expanding triangle (the DOW top is 11400) – these tend to have explosive outcomes, a big move of several hundred points one way or the other If we do break upwards through either of the second scenarios, I see the move being repelled around 11600-11700 on the DOW where the market decisively broke and support becomes resistance, then a fall to a new low around 10500. There should be another 12% to come off the markets from where we are today, if history counts for anything.

A day for close monitoring: oil still pushing on at the mo, ECB rate rise expected which could exacerbate dollar down oil up, non-farm pay rolls could surprise either way and an early DOW close for a long weekend - not many will want to hold over the w/e in the current environment. All the main indices sub 30 RSI - DOW is sub 20 - hasn't been there for years - so got to be ready for a potential bear market rally break north - but can't see it happening unless oil comes off and the hot money temporaily switches home. Also got to be alert for a crash, if crude goes much higher.

DOW long cut for loss

Have to say it's looking pretty bearish out there... but the DOW is sub 30 daily RSI as well as being at the yearly low, so think it's ripe for a spike on some 'good news'. If we don't get that though, down we go...

long DOW rolling future 11773

out at b/e

long crude 13369

I agree with your short there Foale. All the best EBG ...and I'm still happy to post trades.

Chaps, another quality essay from Zeal - worth a read: http://www.zealllc.com/2008/spxdown.htm

Sounds great Dinos - have a top summer