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March 9, 2009

Storm's A-Comin'

Anyone want to bet we get news of a large bank failure or some sort of other dismal development this evening? It is the season, after all. Last March the dissolution of Bear Stearns produced a panic that marked a multi-month bottom for equities, and we are due for the climactic sell to end wave 3-of-5 of this Primary Bear Wave. Mix in the fact that my magic goggles are screaming for a big down day tomorrow, and you understand why I am once again short index futures.

stock index chart

I think traders around the world are going to be disillusioned when that mystical line in the sand called "Fibonacci" fails to hold prices. The failure will probably induce a "long squeeze" and bring us our climactic sell... along with whatever surprise news shows up in the headlines. My stop on the current short play is failure to gap down tomorrow. If we gap up, it simply means that what I see is not true, and I will get out until my vision returns.

My equity account is primed to take advantage of a post-panic rally, as well. As mentioned before, if Sprint continues to hold up, I will be adding to the play. I also intend to beef up my TBT position since counter-trend rallies will likely be met with lower Treasury prices.

Oil worked in my favor again today. Copper did not. I will be taking new looks at both of those plays later this evening. Also, my near-term views on precious metals were outlined in an earlier post about the gold miners.

Quittin' time.


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