16 replies to this topic

[Mr Dev]

Short note

The RUT which is what I trade is now setting up what could be the driver for a mini crash

scenario.

If the RUT manages to slip 1% more today I would expect something like a 7-10% combined move for

today and tomorrow.

No real need for details as they have a tendency to distract us from trading.

trade well

Edited by Mr Dev, 24 October 2007 - 10:09 AM.

[89S10]

Hello Mr. Dev: I have been thinking about the RUT lately. A while back I took on a long S&P / short RUT position on that day when the RUT was up 3% when the S&P was up about 2%. I didn't want outright exposure because I was afraid the market would keep climbing upward, but, with the weak economy, I though the RUT might under perfrom the S&P 500. Okay, sorry about discussing fundamentals. Anyway, on Friday, the RUT was down big, but the Vanguard Hi-Yield bond fund barely moved. So I thought the RUT might bounce on Monday. I did not get out at Monday's opening and I have been kicking myself since. (The 20-20 hindsight said I would have put the position back on at Monday's close.) Anyway, I have been curious what Gary Smith might think here, and if anybody else has a point of view on the RUT, the RUT versus S&P 500 and hi-yield bonds. [Gary, I spent 10s of dollars on your privately published stuff many years back, so you owe me.] Rick

Edited by 89S10, 24 October 2007 - 10:21 AM.

[rkd80]

how would you play it if not in the market currently, wait until EOD?

[Mr Dev]

how would you play it if not in the market currently, wait until EOD?

I would be watchin a lower time frame signal ...for a buy which we have,..and then I would short it ..


while using a buy stop.

Normally I would take the buy signal...and wait to reverse on any divergence or stall in price... but under these

conditions...it's very probable that you'll get stuck on a gap down reversal lower.

So stay away from playing to aggressive..on the long side...just yet.

Remember good trading is about picking your set ups...and executing based on you parameters...

and our parameters should be set on both the plus side as well as the negative side.

Edited by Mr Dev, 24 October 2007 - 10:43 AM.

[Mr Dev]

If that approach doesn't fit well into your strategy and you are out of the market ...and not a fast

trader...then just stay out..or if you want to get long you could wait for the 30m buy signal

which for the RUT would come in around 810. be sure to use about a 5 point stop....look at it as just a trade

and forget about whether it was a dble bttm ..or the cycle low etc.



I'm not totally sure but I think if the RUT can achieve a 30m buy sig,...today's breakdown scenario is
going to be avoided.

So there you have the 805 to 809-ish area to act on for one directional set up..(down) because the 30m sig would yet to be triggered.

And you have the 810 or higher for the other directional set up..(up) and play on the 30m triggered signal.

Edited by Mr Dev, 24 October 2007 - 10:58 AM.

[rkd80]

Guess Ill wait for 809 to try a short then thnx Dev

[Mr Dev]

rkd80

So you know.

For me at this time I'm not trying to play all the way into the crash scenario.

I see the possibility under 790. but I also see a positive divergence that will likely set up just below there..

...so I will just be trying to exit around 782. down into the 778 area.


Down there I'll be thinking of a possible 30% long position.

Guess Ill wait for 809 to try a short then

thnx Dev

You can surely watch your 5m signals for exhaustion in that 804-809 area.

Sometimes we focus to much on the price ...but it's really a combination of a price range and the

all important oscillators either meeting resistance ...rolling over ..or crossing down.

[rkd80]

Absolutely. I will use time as well, if it just sits there in that 805-809 zone until 2:30 ill short it at whatever price I can get. With such shoddy breadth, I am not expecting much of a rally.

[NAV]

Sometimes we focus to much on the price ...but it's really a combination of a price range and the

all important oscillators either meeting resistance ...rolling over ..or crossing down.

Glad, someone said that. Least understood concept in trading.

[kaiser soze]

Been too busy to post lately. But its also about market psychology. Pit bosses such as Jack Boroudjian gleefully admitted being fully short the market on the morning of Friday, Oct 19th. He further said that not only himself but nearly every floor trader was short since traders were a superstitious bunch and short was the only valid trade on the 20th anniversary of Oct 19th, 2007. Ok-so we know all the pit-bosses were fully short on Friday morning. Market dropped two and a half percent. You think the pit bosses covered ? My guess is : Hell No. They sensed the weakness in the market and do not expect much of a challenge in the latter half of October. They are almost certainly riding this market down.