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0.2pt Too Low...

Yesterday, after the first 2 hours of trading, we were expecting a pullback in the market, and we decided to buy it. We placed a buy order at 1320 (as reported on our site). Later in the day, the SPX started its pullback, but it made a bottom at 1320.20 (and we were at 1320). Then the market surged and we missed the rally...

Few minutes later, the SPX hit 1333.68 and reversed.

We opened half of a short position at 1326.39.

For those of you willing to track our intraday move, you can visit our site during the day (we post all our transactions in real time) our subscribe to our Twitter account (free) in order to get real time update of our move.

Why did we open 1/2 short position?

As explained earlier in the week, we consider that the market is actually in an 'abc' counter trend move. Yesterday, the 1333.69 level was the minimal level required for 'c' in order to print a double top.

We continue to believe that the 1350-1360 area is achievable but with the Greek election on Sunday, we don't want to be out of the market if we get a sell off on Monday.

Half of a short position is enough for the time being: if the market surges, we will be able to sell the second half, if we have a sell off, we will be in.

Looking at our indicators, we can notice that the Sigma Trend Index (STI) moved from '0' to '6'. The Trend Level(TL), Swing and the Power Level (PL) remained at '3' (neutral):

Sigma Table

The Breadth Index (red line) continued to improve:

Market Breadth

Conclusion:

We consider that the market is close to an important top and we fear that the decline from this top will be very aggressive. In this context, we decided to open 1/2 short position yesterday, even if we thought that the top of this rebound would be around 1350-1360. We don't want to miss the next decline.

Current position: 1/2 short @ 1326.39

Have a nice day,

 

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