By John Pisanchik

The battered trader fell to his knees and cried out to his Lord, ” Lord what do I do?” And behold a voice came to him that said “HEDGE THY SELF!”

Well that’s the strategy at this point. Hedge your longs. The very important 1100 on the S&P Cash Index held as a resistance point this week, and the market weakened. On Thursday and Friday, the market broke through and closed below the 100 day average both days with Friday seeing even lower lows. Since the market is in the vicinity of the 100 day average, we may see some support come in here. Use any market strength to either hedge or close your longs. Here are the short term and intermediate term objectives to the downside. We already broke 1079, the next major support level is 1020. If the market is going to run out of steam to the downside, it could be there. At the very least it may cause the market to have a short term bear market rally. The next major point to the downside is 961, followed by 902, 847, 800 and finally 767. These are all points in the S&P Cash Index. The strategy is to see how the market reacts at each one of these points. If each point is broken to the downside, then the next level mentioned becomes the next objective. As you can see, there is the potential for a butt kicking decline here, so that is why, at the very least you should hedge yourself. Happy Trading.

By John Pisanchik

Hello everyone, this is my first commentary for 2010. My last one was for Dec 31, 2009, and what I said there still holds true now. The market has lost it’s momentum, and what is really important here is that the market has hit a very important Fibonacci retracement. That really puts a substantial risk to the downside in place. Another important thing is this, since Jan 1, the market tried to rally. It made new highs and then fell back below the top of the trading range that was in place. The fall off was hard and the market never recovered. In fact it fell below all the critical support levels that were in place.

What should be the strategy now for the intermediate term? Well, the market is set up for a correction. If it happens, it will be substantial. So pay close attention to what is going on now. The 1100 level is a very important resistance level in the S&P Cash Index. The market fell below that the other day and was not able to get back above it. If after continued attempts to break it to the upside, it fails, then place a hedge on your portfolio. Happy Trading.

By John Pisanchik

Happy New Year to all my friends. The year ended with an interesting point to note. It is that the market completed a 5/8’s Fibonacci Retracement off of the March lows. This is significant because a reaction from such a retracement is probable. In other words, the market is susceptible to a retracement downwards at this point. This could retrace back to 900 on the S&P Cash Index. There is a lot of damage that could occur in such a downswing. The thing to watch is the relative strength of the individual stock issues. If the market does turn down, you may want to determine the relative strength of your stock vs the S&P Cash Index. If the stock looks worst than the index, lighten up on it, but if it looks stronger, hold on to it.
I hope you had a great 2009, and I wish you great trading success in 2010. Happy Trading.