Targets for Bounce or Drop (12 Oct 2008)

After so many days of plunging, finally we see our first bounce, which is a temporary relieve.
Rather than predicting whether the market is going to bounce or drop, I prefer to keep a neutral bias and trade what I can see.

Based on the technicals... SPY's targeted lowest high is 96.14. Take half your profits once you reached this level and let the other half continue running.

I would expect any drop from the lowest high to face strong resistance at mid target of 85.

SPY's targeted highest low is 69.7.
IWM - lowest high target is 57.51, highest low target is 30.85.

IWM bounced off a strong support level developed since 2002. This will serve as future support level before any attempts to reach lower targets.


QQQQ - lowest high target is 34.9, highest low target is 27.1.



Strategy:
1.Play the IWM and QQQQ for a bounce and reload more positions for any further plunges.
2. As for the SPY I do not recommend playing this because financial stocks are weighing on the SPY...furthermore we have weaker commodity prices.
3. Remember, dont be overly biased for a big bounce....use your head. Be ready to act on a bounce with QQQQ or IWM options. On the other hand, be prepared for further plunges if any.

I own some small positions of QQQQ calls in december.