All three indexes experienced much welcomed large gains today, bringing with it a lot of optimism. And that very well could be well deserved. But if you rely on the trends [which I personally have been lately] it looks like the Bulls have a lot of work to do to call this a bottom.
If you have kept up with my blog you know that I have been using the double short and double long indexes to trade on what I like to call my "sling shot trade". That trade may be a little tougher now as the VIX [CBOE Market Volatility Index] settles down. But even though we have had the biggest one week gains in 5 years, this was done on low volume [especially today] and that has me wondering if we are going to test the bottom again. A weekly high close, or close to it, on Friday would be a bullish technical clue that lows are in place in the stock indexes.
The oil service industry led the charge today but that could be quickly deflated if crude oil demand in the U.S. and especially China continue to spiral downward. A lot of smart people are calling for a trading range in the $50 to $70 dollar range for crude oil. I am bullish long term for everything crude oil, but will be looking to short oil again with the DUG especially since a correction may be due with DUG losing more than 35% in less than a week.
I may be looking for a chance to go short on crude but I will not be playing that game on the indexes anytime soon. I will go double long with the DDM,SSO and QLD on every pull back. That's my plan, what is yours?
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