Thursday, March 10, 2011

Today's Sell Off

The market finally made up its mind and it was to the downside and in the process it invalidated the Inverse Head and Shoulders that was forming yesterday. Using my common sense would have been better this time for trading as there were too many negative and unknown factors for this week. However, I simply could not stay short after seeing yesterday's pattern and as a trend trader. But now that we got the trust out of triangle, I will be looking to enter shorts at or near the Trend Average. I am assuming what we saw today was a W1 of a new bearish wave, so I am expecting a counter rally to test the TA and/or the bearish trendline from the Triangle. If the market can not get over that trend, there will be a Descending Triangle in place targeting 1250. So we should get a better idea of how the markets will unfold on the coming counter rally. In order for bulls to repair today's damage, the market must get over the TA and break the bearish trendlines. As of now, the downtrend that started couple of weeks ago remains intact and will be solidified by breaking of the 1294 support.

I went long today at 1294 betting support will likely hold or at least be re-visited on the counter rally. But I am going short at the end of the coming rally unless the TA is re-captured.

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