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I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.

Michael Jordan

The COT index falls this week to +3.8%.

The market opened today weak. It looks to be heading towards that $170 level to test support. The same advice that was given last week is relevant this week: the market looks weak, short is the correct short term position, but, it looks as if today has traded to a support level on the 5day chart and a reactive bounce may be in order. All the longer term charts; 10day, 15day, are down sloping and not at any technical support levels. Therefore any bounce from the $174.20 area will likely run out of steam circa the $177.00 area.

Assuming for the moment that this is a trend change in the market all market neutral positions will automatically adjust to the new market conditions and nothing need be done at this point. It is likely that many will have already locked in small profits from bull moves and those positions will have eliminated any losses that accrue while the market adjusts.

With short term [weekly positions] there is again the necessity [as always] to get the timing right in order to extract any profit.

The test of the $170 support area will likely occur a little higher around the $172.30 level. We bounce early this week [if at all] and then sell-off hard into the close of the week.

The ‘bounce’, should it happen, is simply too risky to trade unless you are day trading and can close out very quickly any long positions. I would be more inclined to trade any bounce as a new short at/around the $177.oo area.

So what’s changed?

The Fed lopped another $10 Billion off of QE, and investors/traders have sold off stocks and run back to bonds. True corporate earnings have been lacklustre and I think this has a fair amount to do with the disenchantment with stocks since the start of January.

Less money flowing into financial markets means that the indiscriminate buying of stocks, irrespective of earnings, which are poor, has largely accounted for the run from stocks back to bonds.

Trade

Entered Trade

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