Market Update

The market got very close to touching the Trend Average today and reaching the 1570-1575 level I mentioned last week. So perhaps we will see this area challenged tomorrow before the next bearish wave. Now, I think almost everyone is aware of that right shoulder for the Head and Shoulders pattern so I think it is highly likely many will sell or go short at that level. But the real level to watch is 1552 as that support level creates the right shoulder of an Inverse H&S. So ideally I'd like to see the pattern broken (either one) with one strong wave, anything that hesitates around key levels can make you a bag holder. I am planning to load up on VXX again on the right shoulder but the trick will be when to take profit.

Other than that, the HSI and SSEC seem to have finished their respective corrections. One thing I find interesting is that the short interest on FXI (which is a proxy bet on SSEC) is at the highest since 2007. Also, I read someone just made the biggest bearish option in the markets in 2013 bet against FXI last week (right before it went up 4%). So we'll see if this is a classical example of a contrarian trade. I am all long there so I hope this is the case!