10/1/2009 - Market Update

The market moved BIG today as expected (yesterday's market review).  A lot of important technicals have also occurred, so listen up very carefully.

The market has broken out of the bearish rising wedge to the downside (as one would expect), and we're resting right above support at around the 1027  - 1028 area. 


If the market continues to fall tomorrow, then it is likely to test the 50 EMA at around 1014.  The next support area after that is 980.  If the 980 holds, then the 20 EMA should still stay above the 50, and the market would still be considered in an uptrend.  However, if 980 fails to hold, then heavy shorting should be a safe play. 

There are signs that the market could roll over and start a down leg -

MACD < 0
DPO at 0
ADX about to cross
VIX broke above 50 EMA again on a 10% up move.

However, the 20/50 EMAs on the SPX have not confirmed anything.

So, here are the logical decisions you should have made:

• Do not initiate new long positions until it is proven that the supports mentioned above will hold.
• Hold long positions if you have been riding them out for the past few months.
• Exit long positions positions if recently purchased at the 20 or 50 EMA and the stock has now fallen below.
  
• Hold all short positions.
• If your stock dropped >=10% today, SELL IT.  DO NOT HOLD.  DO NOT CONTEMPLATE.  I DON'T CARE IF YOU THINK IT'LL BOUNCE SOON.