http://www.stockrake.com

I’ve been talking and fearful of a move that would create buy signals, but would turn out to be a major whipsaw. This move has happened to the upside, gave great buy signals, but by the time the signals are starting to show up, the market used so much energy to create these buy signals, that it would be time to selloff. I mentioned this in several posts in early July. This move had a slight delay to it and acted slower than at previous historical instances. It threw me off a bit.

This is what I was thinking on July 7th:
“While everyone thinks we have bottomed, I think we sell off again.

Probabilities, based on the charts, say we will make new lows and we will give back today’s candle. It should happen within a week or two. Depending on where we go on the downside, we should see a rally. That is it. Most of the time after that new low is made we get a really significant rally, but I don’t want to think beyond the new lows I think are coming. Lets remember where the trend is. Its down.”

Tomorrow is ultra critical imo. We are above the daily 21dema’s so this could be a great buy op, however, the weekly/stronger trend is pointing down still and the action over the last 3 days might be confirming that trend. Key point here is tomorrow. What does one day make? It makes me a buyer or a seller.

The RUT for example is trading above the 21,50,200 dma’s from the top side. This could be an excellent spot to be buyer under the usual circumstances. Between right now and tomorrow’s close I need to see a close that is higher than where we are right now. I don’t know the amount, but its probably higher than where we opened today. Otherwise I’m probably going short. If the up day happens, I’m going long despite the fact that a whipsaw could be on the table. The whipsaw idea is just my suspicion and not a probability.

I bought DTO small yesterday at the close and sold it this morning for 4% loss. Might be back in that one later on.