Wednesday, January 23, 2008

From the Black Depths of the Abyss


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As mentioned in the previous post, I went long Ultra QQQ ProShares (AMEX:QLD) @68 today at around 1130am (PST).

Why did I go long in a counter trend and in the midst of a vicious bear market? Because my analysis said that we were due for a bounce. I didn't know when the bounce would occur, and yesterday's attempted rally did not impress. But today was a different story.

I've never seen a 70pt rally in ES before. 25pts, 30pts, sure, but not 70 freakin' points. Reading about it makes me wish I was around to witness it in real-time. Right around 10am (PST), the rally started as an innocent looking countertrend pullback. But then the pullback started to take on a life of its own, and broke above some resistance levels.

Near the last hour of trading, the heinous hounds of program trading were released to unleash their egregiously rabid fury upon the unsuspecting sellers. No shorts were spared the beatdown. Markets seldom move in such uniform fashion, but when they do, it is a powerful and beautiful thing to watch.

So, where will the markets go from here? Don't really know, but I will be watching the following support/resistance levels:

Current stop has been moved to just under 70, although I might take profits near the 7am reversal time, we'll just have to see what the markets gives us tomorrow.

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