MARKETS 5/20/09

As this is the 100th post, I thought I might go over how some of what we have discussed is used in real time. These are all actual trades either in s and p futures or in an analogous etf. The average closed in a spring position after a very bearish low volume day. I was flat and had no position at the opening. I had been lightly short futures and was stopped out over night having moved my stop to break even because of said spring position. A gap off of a spring is normally

very bullish but what caught my eye was 1 the very high volume midrange close. This seemed very high as of late and meant selling into the advance. The futures volume for reasons discussed previously was even more striking. The break at 2 with the long red bar wiping out the previous 2 bars gain confirmed my view that the advance was being sold and possibly demand was exhausted as we fell so easily. The next bar was heavily sold with higher volume and a low range close. 10 minutes later another rally attempt which musters no volume and confirms that demand is exhausted. The break beneath support at 92.5 and more important the last support before the high 92.4 confirms the trend is down. We now wait for a rally to a lower high to sell. That comes at 3. When the average closed over the range of the large down bar(above the dashed line) I believed it was too weak to close above that range twice in a row, as we previously discussed and sold, willing to exit the position if we closed above the dashed blue line twice. I expected a sharp down move as we have discussed and we got it to 4. 5 was a hinge and the break at 2:00 showed how eager the selling could be. 6 was an upthrust which precipitated a fall which nicked the dashed blue line below the last support. 7 is the test of the upthrust and an upthrust itself. I sold again with a mental or actual stop above the green line. This triggers the sharp decline to 8. We will see in future blogs whether one can safely sell the first rally, as here to 91.03, after these sharp declines. All stops were moved to break even.