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The worst market results in 2014 so far

Wow, the market had the worst time ever. It looks like we are at the top of the trend and reversing. I do not remember seeing such swings of 300 points (Dow Jones) in just three days. At least for a few last years, this behavior didn’t happen.

I watch weekly, daily, and intraday charts to see how the markets do and what would be the next outcome (see below). I am not an expert in it, but learning. And I have learned a few things so far.

The weekly chart held the trend until today. The large sell off pushed the trend into a reversal. When the market closes below 21 EMA, it is a warning sign to me. On Wednesday, FOMC meeting provided a relief to the markets and we saw a huge rally up.

This also provided a great relief to my positions, mainly to my Iron Condors which are supposed to expire tomorrow.

I though, all is good.

Although, the markets were in a downturn as was clear from the daily charts, today’s trading changed the wheel of fate again. I expected the markets sliding down or moving in a normal matter. I haven’t expected a panic sell off which was even larger than the one in Tuesday.

As I felt “all is good” yesterday, I am back nervous today.

Now we have the weekly chart flashing a red light of a trend turning point, and the daily chart in deep downtrend. No sign of strength at all.

Our rigged market in its 5 year history makes shorting this trend difficult. Is this really a trend reversal or just a dip to buy?

My Iron Condors are in danger again today. The lower, put legs are in jeopardy to get ITM. Calls side is okay and the calls will expire worthless for a full profit tomorrow. I need to pay attention to my puts side.

If the market bumps up a bit tomorrow, I will be safe and all my Condors expire worthless. If it, however, continues in a dramatic sell off, I will have a problem.

Today, I could roll down one of the spreads to a lower strike (from 1925 to 1920), but if we see another wild selling tomorrow, even this rollover will not help.

I will have to watch tomorrow’s trading carefully and if the market slides bellow 1920 and there will be no sign of it going back above it, I will have to roll those puts again.

I am hoping for the best. I hope, my puts will not get breached tomorrow and all my spreads expire.

What do you think? Will the market bounce up or continue sliding tomorrow?

2 responses to “The worst market results in 2014 so far”

  1. HS,

    Man, this has been a wild ride the past two weeks. Kind of fun compared to summer, but kind of scary. I’d like to think the Alibaba top is in and we’ll get more buying opportunities between now and the end of the year. I don’t mind if we fall a little further because I’ve got some dry powder and always open to better yields. Then again, I hate to see my NW go down. As for tomorrow, I think we bounce. But could head to Aug lows again. Good luck out there!


    • Martin says:

      RBD, I pray for the bounce even a little one to stay above 1920. Then I will be out and OK for a correction. It will be a healthy one after such long almost uninterrupted run up.
      Good luck to you too.

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