What a Day!

Today's action was frightening and breathtaking at the same time. I have been trading since 1997 and I admit that I have a lot to learn and experience. I thought I saw just about everything in terms of market melt down, when I saw my portfolio diminish to nothing in 2001. But today, today's action in the Dow was simply breathtaking! I have not seen an index go down another 200 points all within a matter of minutes! -584.86 on the Dow! I do not think this is a one day wonder event. The way the markets behaved, across the board, there is significant technical damage done. On the NASDAQ Composite, the index dived below the 50 EDMA to 2407.87, the support is smack dab at the 2400. If we breach that line and stay down, we will see the next support at 2320. Ultimately we will test the 200 EDMA whic is currently sitting just below 2300 (2297). I know a lot of people lost money today, perhaps significant portion of their trading account or even their retirement, and my heart goes out to those who did. The action today was fast, furious, and unrelenting. It was like being punched in the gut over and over again until you couldn't take it anymore, and more kept coming. I don't see any sign that this will abate in the near future.

On the Dow, the picture right now is even more grim. The index closed today at 12216 -431.40 but all signs indicate that it wont stop until about 11670 where the market will reassess if it wants to continue. The volume on the dow was below average and that was about the only good piece of news that I can say right now. But for now, there is always tomorrow.

Asian markets are continuing their descent and as I write this blog.

My advice is this:

Longs: No one made a dime by panicking. I advise the longs to keep their cool and if possible start trimming their most speculative holdings, get off of margin before the margin calls take your hard earned money, and get off of long calls. Do not give into the temptation to liquidate everything. If you liquidate, so will you.

Shorts: Continue to press this market and use every bounce as a new point to short. I don't like to short with the underlying commons. I like to short using long dated puts as this limits my down side.