Tuesday, November 22, 2011

Limit Order to Exit SDS

Place a "day only" limit order to sell the open SDS trade tomorrow at 22.14 or better. 

As long as there is not an unfilled gap up tomorrow, it will be filled.  If there is a big gap up, then the market should push to fill Monday's gap down.  In that case I don't think the market will be able to continue up without a retest of these lows at least, because the upper bollinger band is still moving upward and the volatility breakout is not complete.  If that gap is filled, then after that another break to new lows for the correction could get more severe.  As long as both the upper and lower bollinger bands are expanding away from each other, the market often experiences rather violent moves in the direction of the trend.  In this case, until the top band rolls over, there could be increasingly large downward moves.  However, the expansion in QQQ is already at 4 days, and on average the expansion period doesn't last much longer than that. 

Also, gold is in a precarious position hovering just above its bull market trendline and just above the lower bollinger band.  It touched the lower band yesterday.  I will try to get into more detail on this concept as time allows, but IF the market breaks to a new low after a brief reversal off the lower band, the bottom will often fall out of the market.  It think that may happen here in gold, and possibly in stocks as well.

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