Week Ending 10/02/09

ES 9.30.09It’s been a good week when not only am I making money in the type of chop we had, but I find myself calm & patient over those other tickers in my account covered in red ink rather than green.  [rubbing hands together]  Yes, things are going exactly as planned.  At least so far.

ES 10.01.09ES_F broke to the downside on its 7-day triangle with my price target of $1005 (above).  Then broke decisively below its Regression Channel yesterday confirming [in my mind] that we have begun a correction here [see left].  In estimating A-B-C waves [and again these are only estimates at this point] I came up with a target low for the correction again near $1000. 

Now I heard Bob Pisani was on CNBC saying traders down on the floor are waiting with orders @ $1000.  Cool.  That’s big buyers folks.  Not us little guys.  We’re talking large traders with deep pockets – the kind that want to jump in so we can all ride Wave 5 up in this rally.

I sold 2/3 of my ES_F short and inverse on the opening drop @ ES $1013.50 for a tidy profit and just shorted a little again at $1023.50.   Consider it opposite of *buying a dip*.  We may melt up this afternoon as the Margin window closes and small traders rush to cover their shorts but I’m not too concerned.  Next week I expect to see some upside; approx 50% of what we’ve lost since 9/23.   Once we hit that area I will short $ES_F with my remaining allocation for this trade.  My longer term cover order stands at $1005; no need to be greedy.  From that point I will look to add to my long positions to rider Wave 5 up.  

One last note:  I’ve set an Alert with a cover order for $1050 in the event there’s a second coming and I’m crucified on the short side. 

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