EC Fake Rally Friday – WTF Are People So Happy About?

As I walk on through this wicked world,
Searching for light in the darkness of insanity,
I ask myself, Is all hope lost?
Is there only pain, and hatred, and misery? –Elvis and Lowe 

Once again the Futures are up in the morning and once again we have to wonder why?  

Now, don’t get me wrong, we love a fake rally as much as the next guy, especially when it gives us great shorting opportunities.  Yesterday, even as I noted in the morning post that our Wednesday morning Futures shorts made $6,050 in 24 hours for Members who followed those trade ideas, our new suggested shorting lines of Dow (/YM) 16,200, S&P (/ES) 1,845 and Russell (/TF) 1,150 all came in and, before lunch, we hit 16,150 on the Dow for a $250 winner, 1,835 on the S&P for a $500 gain and 1,141 on the Russel for a $900 win.  

So PLEASE Mr. Market – feel free to run us up again!  Actually, this morning I sent out an Alert to our Members identifying the Nikkei (/NKD) as the best shorting opportunity of the day, week and probably the month of April as well.  Testing 14,795 this morning, we’re short below 14,800, which is the level I predicted we’d run to at 9:50 am on Wednesday in our Member Chat Room, saying:

Submitted on 2014/03/26 at 9:50 am

Nikkei/Eric – They are happy the Dollar is back up (80.27) and that means not a good short at the moment.  Over 14,500 has very little resistance up to 14,800 so not a good spot to short and maybe a good long, actually, but my heart isn’t in longs at the moment.  

 

The long play was good for $1,500 per contract but, as I said, I wasn’t into it.   The short play, from 14,800, I’m very excited about for reasons I have outlined in previous posts and that we went over extensively inthis morning’s Alert to our Members, so I won’t get back into it here.  Once the market opens, we’ll look for a nice short on EWJ ($11.21) as well.

[Chart by Dave Fry]

Do you want to know something really funny?  I was also detailing in yesterday’s morning post how we were focusing on TZA as a great market hedge and I laid out all 5 of our bearish positions and, with the Russell making the usual fake move up in the morning, any one of them were very easy to enter in the morning.  The aggressive TZA spread from our Short-Term Portfolio was up net $4,510 at the time and those same positions finished the day up net $6,100 – another 35% gained in a single day on just a 0.35% drop in the Russell.