Pow! Did anyone get the number of that truck?



After being mauled Thursday in a severe bear attack we licked our wounds, hedged part of our position, took partial 63% profits in our SPX position (down from 75%), and tried to figure out where the ambush came from.  It wasn’t difficult to figure out.  Soros publicly stated that he was taking a large bearish position on the market.  Let’s call it the Soros Gang — not a card carrying group  — but those of his weight and persuasion, seeing the master show his cards  followed and a rout resulted.  The attack started in the middle of the night in the futures and by the time you (and we) woke up the damage was done — in the first two minutes of trading  — a significant amount in the first minute gap.

Damage of this type is often followed by more damage.  Which means we may have more to withstand.  The best practice is to acknowledge the damage, observe the stops already present in the system and bet that Soros may make a short term profit here, but when he has to cover he will propel the market higher.  Shorting the market here against a bull trend of this strength is a rabid speculator’s play.  He and his gang are betting on Congress to screw up the country — hmm… maybe not a bad bet.  We’re betting on the chart.  Trends tend to continue.  Short term trend will continue awhile.  Major trend will resume.

A close up look.  Note how far away important trendlines are.



In general we think that everything that happens in the market has a technical explanation.    In this case we think these events have a fear of Congress explanation.

Stay tuned.  We will be posting more letters this weekend.

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