Frankly, the reason has got to do with my inexperience in reading indexes that have been doing major see-saws over the last 1 month or so.
The exercise almost became futile, with candles indicating a possible reversal one period and then totally kaputted on itself the next period.
Trading this market is tough, especially suicidal when one-directional bets are placed.
Nevertheless, it is timely to review the most crucial index, SPX, but reading the chart using a very long time frame. This way, I try to avoid being whipsawed in my opinion.
The annotations within suggest that SPX appear to be heading towards some major and long term support.
1st Support : 1172 region
2nd Support : 1110 region
SPX can continue to tank as it did yesterday, with a hefty 4.7% loss. Market internals was so bad, it "outperformed" Oct 19, 1987 when the losers outpaced winners by 16 to 1. Last night, NYSE and Nasdaq did a 20 to 1 decliners' volume /advancers' volume and with decliners/advancers at 19 to 1 !!! That's how much selling occured and it could have only been achieved with institutional selling; ie. even they cannot tahan anymore.
These very bad sentiments could really drive prices lower still and if that happens, and the 2nd support fails at 1110 region to hold up, no sane person should be looking at Longing the market without consulting a psychiatrist !
But having said that, a very Long Term view shows that SPX is still in the upward swing...I mean, looking back 20 years... and that's when these supports come into play.
Over time, one learns that Bulls will have their reasonings and Bears will have their arguments. Pointless exercise. Traders will form their own view after a healthy dosage on reality check. Put on a game plan, execute and manage risk and profits. That's how it was done successfully 80 years ago, and that's how it should be done now.
Therefore, position risks must be managed at all times, especially now, since equities markets are like pretty fickle young things... one moment hot, next moment cold. Dont put all your emotions in one basket and risk being permanently hurt :)
I would be very careful, at this juncture, not to take single directional bets; like Long or Short stock, Long or Short options.
Possible positions will be to take advantage of the HIGH VIX at this time, which stood at 31 as of 15sep's close. Some Short Volatility examples, could be Short Call Ratio Spreads (lower risks as one would not expect a big extended rally at this time) or Long Condor (giving a wider range of success with limited risk exposure) or even a Calendar Spread (unless u believe the volatility will last for a long time).
I wish all Huat Huat !!!
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