What a turn in events! Isn’t it amazing how fast we can go down? This is the beauty of a bear market…as intelligent traders we should’ve taken advantage of this  and I sure hope you did!! I’ve been stressing for weeks how this “relief rally” will end and a new leg down will begin. The bear flag along with the decreasing volume was a clear giveaway. We did infact reverse at 1300 as we hit our head on resistance. I applaud you if you started shorting the S&P 500 with the UltraShort ETF (SDS) at that point as I suggested. If infact you did take my word to go short, it would be nice if you sent me some sort of a thank you to my PayPal: richard[at]hedgeagainstspeculation.com, even 1% of your profits would be appreciated

With unemployment climbing to a 5-year high of 6.1% the market is in shambles right now. Further, technical analysis led me to believe that we were going to test the 1218 support and SOON! Breaking important trendlines and the MA(50) is not a positive sign. As many of you know, I bought TWM late last week but I added to my short position Tuesday morning as I loaded up on SDS. After profiting $8+/share I put a stop loss on SDS at $72 as the S&P approached the 1218 mark. I expected the S&P to bounce off support but not to retrace as much as it did. The gains we observed near the end of the day was nothing more than a bounce off support but Yahoo! Finance thinks otherwise:

“Wall Street wrestled with intensifying economic worries Friday, extending sharp losses after a disheartening jobs report and then grudgingly engaging in some mild bargain hunting that gave the market some modest gains. The major indexes ended the week with big declines, a sign that investors, who not long ago expected the economy to improve, are now growing increasingly discouraged.”

You sure won’t find me bargain hunting at this time, those who are going long at “discount prices” will get slaughtered in the coming weeks. In fact, I took this bounce as an opportunity to get back into SDS which I did near the end of the day. Mondays and Tuesdays in a bear market are usually down days…

Oh by the way, I know there are many Cramer fans out there…but please do yourself a favor and ignore everything he says. Better yet, do the opposite of what he does! In July he was telling everyone to stay away from the markets and now he’s telling us to pick up discounted stocks, what a goofball!! I must say that Mad Money on CNBC is very entertaining at first glance, but I wouldn’t suggest “stay[ing] with Cramer”…if you’re a responsible trader, you would wait for me to blog instead

Richard
richard[at]hedgeagainstspeculation.com