I have not traded yet for this week, as I said before I feel tired and confused about this volatile market. It goes up and down all by news. On this Monday and Tuesday, it is amazing that all the big drop in the morning were bought aggressively in the afternoon trading. Basically, the intraday chart for Monday and Tuesday looked identical. But today market showed its true action -- going down.
Today due to the news that Italy bond yield went above the critical level 7 percent, the US market had a big gap down in the morning from 1277 to 1250, then another round big sell off in the afternoon to 1229. I really do not like these kind of big overnight gap. If you were wrong about the direction, you got burned. Yesterday close I was thinking about shorting the market, but I was also afraid that market could have another gap up to 1300 then sell off. Hence I did not take the risk. I would rather want a good sleep even though this kind of trades can give big rewards.
This week I feel I am too cautious, not willing to take risk. Actually today's noon is a good timing to go short if I want to try. Anyway cash is a good position here.
Market went as I anticipate. It did test 200MA yesterday then sold off hard here. I am expecting the market will bounce around 1215 support then continue going up for the next 4 days to form a lower high (1260 zone). It will form a triangle wedge pattern. My timing model should give a sell signal on Tuesday close next week. If market go up from here to next Tuesday, I will all in to short this bounce. I think it should have good risk reward. In my point view, this rally from October is a bear market rally, which is leaded by beaten down stocks. It will fail eventually.
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