Today, the 92.00 level was hit and should have resulted in a "breakeven" stop loss order triggered for anyone in the trade on SDS. This afternoon the short-term model once again hit overbought territory. Remember from the last post that it never actually got to the oversold extreme yet, so that is why I did not post an exit.
I personally was not in that trade. However, after today's overbought reading and reversal in the markets, I bought SDS at 94.80ish. I have a stop loss of 86.80 or today's low in SDS.
I think we are at a "breaking point" in the market right now. Price has been converging over the past week. So it is like a spring coiling. With high volatility, a price converging pattern I think sets up a ridiculously strong thrust in one direction.
The fact that I bought SDS reflects my belief that the market may have at least one more strong move down before a more lasting bottom. If that the gets stopped out, it is probably because the strong thrust is beginning to occur to the upside instead.
I'll keep you posted.
Pete
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