Thursday, October 09, 2008

Snoozefest Breaks in Last Hour - Financials Get Crushed after Ban Lifted

Until the Qs broke out of the symmetrical triangle, I had only one trigger on this CNQ inverted C&H. Pretty standard fair except 2 caveats - 50 SMA support and base above pivot point P. I took the trade anyway. My target was a measured move of 100% from the morning swing high to the base, with a partial at S1.

The day was a real snooze up until the last hour. One reason for that might be the divergence between the S&P futures and NASDAQ futures. The S&P futures tested yesterday's low in the A.M. (early weakness in financials after the ban was lifted), whereas the NASDAQ held within a narrow trading range until the last hour. After the Qs finally broke, it was a free fall and a sweet ride down.

JPM and MER B&B short.


Simit Patel said...

Nice analysis. I think we might find our short-term bottom when these shorts start to cover.

TJ said...

Thanks Simit,

Asian markets getting crushed tonight and futures slipping lower AH. Maybe we sell-off again tomorrow morning and bounce in the afternoon. But, I'm not holding my breath given that tomorrow is Friday.

Anonymous said...

Looks like we are headed for a big gap down opening tomorrow... yet another buying opportunity.

TJ said...


NASDAQ 1500 looks like the last best hope for support. At this pace, we'll likely hit it tomorrow or Monday.

john said...

Nice job staying with what works even while the world goes nuts.

The A Trader said...

Hi Jamie,

I always read your blog and I love the way you trade all these methods. I have two questions,
1)Would you please write more in depth about bear flag,what exactly do you like to see before you enter the trade?
2) re MER and JPM, did they remove the ban on short selling for financial stocks? I thought it has been extended until Oct 17.

TJ said...

Thanks John,

Yeah, these markets are extremely volatile and mistakes can be extremely costly, so I like to stick with patterns that are well formed and have a good chance to move in my direction.

TJ said...

Hi A Trader,

Okay, I will do a post on flags soon.

The ban on shorting financials was lifted Wednesday night at midnight. The SEC said that it would be lifted 3 days after the rescue package was passed into legislation or at the latest Oct. 17 if no legislation was passed up to that date. So it was nice to see that all banks and financials that I track were shortable yesterday morning. The only one on my list that wasn't shortable at IB was ZION.