The Stock Market moves in a price path of uptrend and downtrend which are governed by complex dynamics of news, economic growth reports, manipulation, fear and greed. When the uptrend has won, the market will continue being bullish until cumulative market dynamics are provided in sufficient quantity for the supply and demand to go past the equilibrium line, otherwise the market will continue with the uptrend. The opposite is also true of the downtrend.
NASDAQ Composite, June 23rd, 2008
The market changed from uptrend to downtrend on June 23rd, 2008. The stop loss of 2427.93 must have stopped you when the price went below that value on June 11, 2008. If you are darling as I am you should have short the market then. But then if you are not a high risk taker as you are, you should now be holding neutral positions (of puts) to the downside. We shall now wait (but with neutral positions to the downside) for a crest to form and go short this market then, only that we shall need automatic stoploss order on standby.
The final confirmation of a downtrend was triggered by the chart shown below.
Confirmed entry to the downside proper is yet to come when we shall get a well defined crest. We then shall go short this market, only that we shall need automatic stoploss order on standby just incase the market decide to breakout to the upside.Action: June 23rd, 2008: the market has been confirmed to be downtrend. Open on June 24th, 2008 Neutral positions and or Calendar Spreads to the downside (use puts) and they should be rolled over every time both legs get "on money". Stop Loss/breakout to upside is 2549.94 plus 0.1% equals 2552.49. This stop loss or breakout is adjusted accordingly as the market progresses.
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