That Was a Nasty Day

On Monday the markets had enormous rallies and I wrote the following post –

http://nbcharts.blogspot.com/2008/10/i-cant-find-crash-without-retest.html

In the post I looked at the Crashes of 1929, 1946, 1987, 2001, 2001, 2002 and 2002 and came to this conclusion –

“The biggest rallies have come in Bear Markets. Bear Market rallies make you feel good, scare you about being in cash, suck you in and then crush you. Buyer Beware!! (Gary Kaltbaum taught me this)
I actually started shorting some this afternoon. I expect a retest of Friday's lows.
I can't find a crash that didn't have a retest!”

“I am not interested in buying a spike down, and I am not interested in buying a spike up. I want to wait for a decent entry point, with definite risk.”

“The most painful scenario right now is a sharp selloff to retrace some of the massive gains of the last few hours of trading.
That would be enough to scare some more people into selling their stock before a more meaningful rally. Remember, the average rally from these emotional extremes is 24% over 8 weeks.”

“History tells me that there will be a retest of the recent lows, or at least a decent retracement of the first rally off the lows. It is at that time that I will be able to determine if I should be buying and how much risk I may be taking.”

I covered my shorts today when the Dow was down about 550 points. I am no longer interested in shorting.

A two-day moonshot up into the 10-day moving average, followed by an implosion. That was the expected action and that is what occurred.

This is not rocket science. I simply looked at how the markets reacted at the last emotional extremes and stated that I expected the same to occur on this crash.

I am not brilliant. I JUST DID MY HOMEWORK!!

I am WAY ahead of the markets this year and that allows me to be patient and wait for the low-risk entry points.

I am now going to do a lot of homework and try and figure out how to participate in the rally that I feel is going to show up in the not too distant future.

Now let’s see if the markets give me a Follow Through Day

http://www.investors.com/yahoofinance/2006w24/storyC03.asp