Will We Hold It Wednesday – Must Hold Line Edition

Wheeeee, this is fun!

Suddenly we're making a lot more money on the way down than we did on the way up on our Futures trades and that's not a good sign for the market.  We played the Dow (/YM) Futures and the Naturar Gas Futures (/NG) for a bounce in the morning and only bounced from 28,000 to 28,100 (up $500 per contract) before we stopped out at the opening bell and we quickly got our bearish crosses which allowed us to play the Dow (/YM) down from 28,000 to 27,000 for gains of $5,000 per contract at 27,000 – now that's a nice hedge!

Sadly, we're still in the index shorts as we haven't had a reason to  stop out as the weak bounce line on the Dow, for example, after a 2,000-point drop in two days, is 27,400 and we haven't gotten over that yet.  More importantly, as noted on our Big Chart, the Dow has failed it's 200-day moving average at 27,223 and, below that, we may be on the way to the -10% line at 24,750, which would be nice for our /YM shorts (another $20,000 per contract) but terrible for the markets and the US Economy – so we're not exactly hoping to make that much money.  

 

That's what the Must Hold lines are on our big chart, they signal the beginning of a bear market and we really need to stay on top of them or things are likely to get much worse indeed as we only capitulated and raised our Must Hold lines earlier this year.  Before that, we had been predicting a fall back to 2,850 on the S&P anyway so, on the whole, "everything is proceeding as I have foreseen".  

As in yesterday morning's PSW Report (except lower), we'll stop out of our shorts at 27,250 and, like yesterday, we can reshort if the indexes cross back under their low supports at 27,000 on the Dow (/YM), 3,100 on the S&P 500 (/ES), 8,800 on the Nasdaq (/NQ) and 1,565 on the Russell (/RTY).  We certainly need to see the Dow back over it's 200 dma and the Nasdaq has to clear 9,000 before I'd…
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