If you can identify certain patterns and interpret them by mathematical algorithms, you have a winner. The sell signal was already out yesterday and warning signs were written all over a couple of days ago. One has to discard the intra- day variations to maintain the overall picture. The rally this morning was based on one company’s (WMT) outlook on retail. The rest of the retail industry was lack luster. Further, if one examines closely the Trade Deficit report today, the import price index was inflationary. However, the rally kept trucking along until finally one ECB came out to say specifically that inflation was rising, everybody ran for cover.
OEX Oct 730 Puts and OIH Oct 200 Puts proved to be winners. Money doubled in one day. The numbers for tomorrow are 733r1, 727pvt and 719s1. The anticipation is for the correction to continue albeit tame PPI tomorrow. The widening of r1s1 range depicts WR7 which indicates trend exhaustion.
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