Wednesday, July 28, 2010

Market Comments

Russell has been very strong as it is usually a good target for shorts in momentum moves and they have been getting smoked. The problem is that the Russell is very easy security to get burned with. We have seen it on this rise. The shorts got hammered so I was looking for capitulation. If you thought that 615 was a good short, then 630 seemed much better and finally 670 took you out - most likely a very damaging result.

Today struck me as a short capitulation day on the RUT especially for many reasons. The open sucked, so I shorted the TF and NQ  in a rare discretionary trade around the open. I covered that trade in the 663 area and am now left with the core short position. But what was interesting is that the leading index, (i.e. RUT) lagged big time today and its still lagging overnight. This is a classic capitulation setup. Strongest index at the open weakest at the close.

Matt Fraily/ sent me this chart which also shows a potential for a major turn on the Russell...I think this is an interesting chart...
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