The collision of global markets and social mood

Thursday, April 18, 2013

The Flick Of A Switch

Yesterday did deliver a marginal new low with several divergences. A/Ds, ticks, volume -- all were less negative, while the VIX made a higher high and reversed.

I traded 155 calls and got flat by the end of day. Still holding tranches of 156, 158, and left-for-dead, fully paid-for 159s.

I think 1539.50 may be in jeopardy, however. It is starting to feel as though a larger correction is brewing. Yesterday's bounce, for instance, was lackluster. Last night's futures action was so so.

I'm also adding up the larger events and seeing a possible shift in social mood that may prove significant. Bitcoin, gold, equities, the Boston explosion . . . it feels as though a switch has been flicked.

Social mood can and does turn on a dime. The last few days remind me of one of my favorite quotes:

“When optimism has been high for a long time, it takes very little movement 
away from peak euphoria to produce stunning effects.”
~Robert Prechter

Yesterday's set up should have yielded a sharp reversal with a 1575 target. That's why I was rather aggressive in the face of the continued decline. Unless this market springs to life over the next two days, I may take the other side of the trade and look for spots to get short.

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