Well, the break above 805 and break below it was pretty quick. Not good for the bulls that this key level rolled over so easily. I’m more comfortable trading the short side in this market because it is the primary trend. When the price goes down, I tend to believe it. When we have these huge moves higher, I’m always a big skeptic.
Look at the Dow. It looks like a classic retest. DIA hit resistance right at its prior breakdown level (8000) and it also hit price momentum resistance (look at RSI).
I added an XRT short today. I bought in at $22.80 so I certainly did not get a great price. However, if I am right about $24 being the high, the trade has a clean stop and a nice risk/reward profile.
I also added a short position in IYT today. This also looks like it hit resistance and that price momentum is also tapped out.
Is the entire market (especially commodities) just driven by the dollar? I’ll be watching to see if UUP breaks $26 or whether it falls back after retracing $26.
Notice how USO and UGA are getting weak as the dollar gains strength again. These are starting to look like fake moves based solely on the drop of the dollar.
In terms my own trading today, even with a short portfolio, I took a decent size loss today because my shorts could not counter perhaps the worst day my junk long portfolio has had since I started collecting junk longs back in November. It was disappointing to lose money when you have the market generally pegged correctly.
The trades:
- Trimmed my long position in DXO
- Added 3% short position in IYT
- Added 2% short position in XRT
- Sold off 1/3 of my long position in VXX
- Added LNC as a junk long
UPDATE: I have added a chat room to the site for those interested. The link is by the other C&C links on the right hand navigation pane.