Become More Humble as the Market Goes Your Way

"Become more humble as the market goes your way." - Bernard Baruch


Job reports out today, which should hold at 10%, and non farm payrolls also reported; both of these can act as "triggers" in the market.....and did they. By 10.17 p.m. the market had dropped 176 points, to a theoretical Dow low of 10,043. We twitted new support and resistance lines and sent them out. Our long out of the money hedge to the OEX Feb 465 Put rose to 2.20 by 10.30 a.m.
We held three days, bought twice, and had a 100% plus return, for another great profit this week. Again, we bought at $1.10, and sold to 2.36 for a doubling by noon.

The market is very very fearful, even if VIX shows complacency. It's why I see it as a lagging signal, showing the validity to us of the public mood, but never reflecting where support and resistance "kick in." We saw it at 10,746, what we projected as the Fibonnacci top, and the slight move above it, before a drop now to just above 10,000. We've hit almost an 8% correction since the beginning of the year, not a good sign for the market, some say, in 2010. By 1 p.m. the theoretical Dow had fallen below 10,000 and we were approaching the 240 drop that we believe confirms a true bear bias.

We will issue a higher risk trade call for possible retracement, but remain watchful that the market may have another 3 to 5% to truly drop and shock us, with a true 10% plus correction.