We Got Continuation On the Short Side

May 4th, 2011 | by Hugo Gullett |

What I talked about yesterday was that continuation pattern. I cashed out of my index fund shorts as well as my TZA today. I was also long some LAMR puts, sold those early this morning for 51% gain, however, had I held another 1 1/2 hours would be up over 100%.

I think tomorrow is probably an up day. If its small range green or red (ie doji) I lean towards the “past chart” from yesterday and think we are going to go on another bullish run (would rather see this scenario or even worse selloff). If tomorrow is a decent up day, I’ll be looking for a back and forth type move that ultimately leads to new lows and a potential trend change and will look to short.

I’m not basing this on 1 day, the pattern has occurred before and I’m not verbalizing the whole thing because I just don’t feel like writing that much.

Support on the SPX is in the 1335 area.

My much longer term view is ultra bullish though. The longer term charts have made some very bullish moves over the last 9 months and have taken out some important resistance areas. Its most likely time to back fill and bounce off rising moving averages (this summer). We have just come off some monthly overbought indications and that can lead to anywhere between a 1 month to 5 month consolidations. However, the most common range is in the 3-4 month periods. So if we take May, June, July, that leaves this August to begin the period where the market will go to new highs.

Play short term, think long term though and remember which way the stronger wind is blowing. That is higher for those that can’t solve my bs riddles.

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