Is the bull market rally dead? Time to hedge?

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We are watching with intense interest the dance going on with the resistance lines and the Basing Point stop in the INDU.  (9663)  Today’s extreme volatility has led us to put on a small hedge in the short ETFs for the Dow and the Qs.  In addition the proximity of the resistance from 2000 (and the boundary lines of the bottom formation) and the breaking of the short term trendline with an (at this point) 258 power bar (a 2.6% bar).  The ETFs we are buying are the DXD and the QID.  This is a scale in position.  If the next down horizontal line is take out we will increase it.  If the recent high is taken out by 2% we’ll whistle merrily and caress our wins in F and FNM for consolation.

This is an agressive trader’s trade.  A more conservative approach is to wait for the horizontal line to fall.

Somewhere we read Jim Rogers saying that people were always talking about how he caught the top of trends.  He said people never talked abut the 8 or 9 times he tried to catch the top before he caught it.  (We are caressing the memory of our mismanagement of the Qs position.  Feels like cactus.)

We foresee some stormy weather  this week and the punditry is abuzz about the snake bit history of the month of September.  We intend to tighten up all our stops.  Might not be a bad idea for our readers too.

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