Outlook

1. Hammer on the 10 year note:

http://stockcharts.com/h-sc/ui?s=$TNX&p=D&yr=1&mn=0&dy=0&id=p71267183058&a=235052232

2. At all time lows (December 2008) on the weekly.

http://stockcharts.com/h-sc/ui?s=$TNX&p=W&yr=4&mn=5&dy=0&id=p44608524031&a=234623991

3. Hong Kong (HSI) at 38.2 retrace of entire bull market and good support. HSI is a leading indicator, IMO.

http://stockcharts.com/h-sc/ui?s=$HSI&p=D&b=1&g=0&id=p68835916138&a=241970015

4. SSEC shows positive divergence with SPX.

5. /ES bounced off 61.8% retrace of 1100 - 1206 move.

6. $COMP at double bottom levels.

I think possible bounce hereabouts - to SPX 1220-1250.

Then, in September, a lower a low in equities and a higher low in bonds and HSI. Similar to October 2008 - March 2009 divergences.

If not, double bottom around 1090-1100 and bounce to 1190-1200.

Just my 2 c.

New Trades

Bought TZA at 47

Sold TZA 52.5

Bought TQQQ at 57.31 (/NQ 2094) - This is probably a ST trade, but not sure.

This is how I'm playing it

/NQ goes to 2260.

/ES to 1220-1225.

DNDN to 20.3 (about 90% gains from here). First stop 16.40.

Edit: Reconsidering DNDN now.

Lessons from this crash

1. Rely on my own analysis.

2. Meditate.

3. Be comfortable with not doing anything.

Hi there! Having fun yet?!

I think the fed will wait out the panic tomorrow. Then when things have stabilized (next Tuesday?), and the bounce has started, the Fed will kick in with news about QE 3. That's when it will be most effective.

Tomorrow we see 1180 or so on the /ES.

Then over the next 30 days, we're going to get a monster bounce. Within a month or so, we'll be at 1320 or so on the ES. Then we drop. And wait and see.

ST ES (S&P E-mini) Roadmap

1264 (today/tomorrow August 2/3) -
1280 (tomorrow/Thursday)-
1220 (August 15) -
1250 (August 30) -
1150 (September 15).

Big Picture

1. Breath is weak, and has been getting weaker, as happens before the end of a bull market. The NYA closed below the 200 day and will have resistance above now. The RUT closed barely above. The NYA and other indices have large H&S patterns. The $BSE has a target of at least 16,000 (IMO). And Gold as been on a tear. Also, short-term, we are now entering the down phase of the moon cycle. New moon is here; we are headed for a full moon. This indicates further bearishness to come.

However, before a bull market ends, sentiment is usually very positive. We haven't had very positive sentiment since March or April. Of course it's possible that we are already in Wave 3 of the bear market, and March/April was a top.

However,

2. A few indicators indicate that we made a short-term bottom today (or will do so Monday/Tuesday). These are divergences on 5 MA and 10 MA of advancing stocks on the NYSE and on New Highs (positive divergence in New highs but not yet in New lows. The Russell printed a hammer.

3. A few other indicators (VXW:VIX) also indicate a bottom, perhaps an even longer term bottom.

4. At this point, I plan to go long on Monday or Tuesday. I will be careful with longs. Whether we are in a bull market or not, I think we get a bounce here or Monday. After the bounce, I will likely check out and consider going short.

Monday, Monday morning

1. FAS at 24.7

2. SVM at 11.3 (top pick)

3. AG at 24.4 (top pick)

4. YOKU at 34.3

5. AGQ (at 214?) top pick.

Silver is at $41 resistance. If it breaks through, it's going to 50. I think it will break through, possibly with some hiccups. A lot depends upon this stupid debt deal.

Thursday

FAS at 23.6

TQQQ at 86.8.

AGQ at 214?

YOKU at 33.5?

Wednesday's Plan

I may buy only one or two of these.

Buy BGU at 83.2.

FAS 23.2?

Buy SVM at 10.9

AG at 21.8 - 22.5 zone.

Sell SOHU at 86.2 or so.

BAC at 9.3