Wednesday, October 27, 2010

Waiting for Godot

I swear, waiting for the end of this uptrend is like waiting for Godot. Every time I think the turn is at hand, it isn't. Even today's meager five point advance in the Dow still kept us inside the rising daily RTC channel. However we are now in the lower half of the channel, and have been there for the last six sessions straight, as opposed to the entire earlier segment of the current uptrend. A decline tomorrow of just 25 points will cause a trend reversal setup once again, like we got on the 19th.

But that one did not trigger and if the market falls tomorrow, I'd need to see a second day of declines to declare it time to go short. But for now, I still can't go short.

In the meantime, today's action formed a long doji candle, indicating the considerable uncertainty in the market. The resistance of the April highs continues to be formidable. No doubt many of the people who rode the summer roller coaster from there all the way to the bottom on July 2nd are just so glad to finally have made back their losses that they're cutting and running.

So what to do? I'm mostly just sitting back and watching right now. I did sell my position in SD today at 5.76; it closed at 5.66. It's RTC does not quite indicate it's time to sell, but all the rest of the indicators do. I also bought some more CIM at 4.08 after it took a 5.58% dive on a 2 cent miss; that closed at 4.06. But those are just tiny trades. I want to see how tomorrow pans out before doing much else. For what it's worth, the ES futures are not looking too happy right now (1:15 AM), down 525 after having been up by 575 earlier this evening. Patience is the key.

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