Kung Fu Bears!

Bulls, especially the tech bulls, gave bears plenty of black eyes since Mid-March, and along way, they started to mistaken the black-eyed bears as the fun-loving, bamboo-eating, trash-talking comic relief pandas, and they paid dearly for that mistake in the last four sessions. With today's drop, NASDAQ (and QQQQ) and Russell2000 finally joined DOW and SP500, breaking both MA50 and May lows. All major indices are oversold on the 60 min charts, but are still 1-2 day away from oversold on the daily charts.

It is quite obvious that at this stage, the easy/fast money from the short side has been largely made for most short-time-frame (3-5 days) swing plays, and like many of you, I would actively bottom fish. However, keep the following in mind when conducting such risky fishing business:

1. The overall market has now resumed its primary down trend that started Oct'07. Be very careful whenever trading against the primary trend, especially when it is going the same direction in every time frame.

2. Bottom fishing here is only for the technical rebound, so try to initiate as close to the possible bottoms as possible (deep oversold+key support), honor your stops, and don't be greedy when taking profits.

3. Watch the momentum and candle formation, especially on the daily chart. Currently, these two indicators strong favor more downside in the near-term.

4. Keep eyes on Leh and WM, if they keep dropping like a rock, the market won't go higher in a hurry as the fear of something terrible persists.

5. Speaking of fear, even the major indices went down a notch today, VIX did break
the earlier high. As I said before, no fear, no bottom.

Position update

I exited my AAPL July 185 calls early this morning when it broke the opening low around 183.5. I need to be a bit more patient with AAPL under the current market conditions. As a restless wabbit, I exhibited extraordinary patience today by sitting tight on cash, resisting urges to go long on stocks such as AAPL, MA, PCLN, DRYS, and GS. I feel that I might get better entry prices in next 1-2 sessions.

As for tomorrow, I might start some fishing if the market gaps down at the open, I will refrain from chasing the long side if it gaps up at the early going.

A special note:

When answering question #4 in my survey: "If a significantly increased readership will drive me to maintain the current pace at the blog, are you willing to help out on this by means such as recommending it to your friends or/and post your recommendation on other venues such as Yahoo stock discussion boards?", about 80% of the participants said yes, and I do appreciate that. May I ask those folks to follow through their words in next couple of weeks whenever you think a post is worth recommending. I will see if there is any noticeable increase in the readership.

Thanks in advance.