S&P 500, GG - October 2, 2009 - Quick Update

I have been having computer problems which I hope to resolve over the weekend.

As for general market, index has sold off significantly. As we had mentioned, a move below 1045 changed the short term trend down.

Index is significantly oversold, especially in terms of breadth and volume. This is the type of condition that tests the true character of a rally. Bears are all excited again. So if the oversold conditions cannot produce a bounce. It may be game over for the bulls.

I actively bought SPYs in the pre-market after job report. I am looking to sell a good portion, or all with very tight trailing stops for quick profit

For now, I am going to tentatively assume that the top, or a top is in.

If we get a bounce, and index cannot get fully overbought short term, it may be game over for the bulls.

If we get a bounce and index can manage to get fully overbought short term then we'll review wave counts.

As for GG and gold stocks, everything looked good where we left them. I mentioned that all intraday frames looked positive, but the larger daily frame needed work by gold bugs. It seems like gold bugs got sprayed yesterday.

some of my tighter stops were hit.

I actively bought GG in the pre-market drop. I am looking for getting out of some or all with very tight stops for quick profit.

Regardless, some key seniors held support. If seniors hold support, I will look for a bounce (a rally?) into expiration.

If Juniors follow, then fine. If juniors look weak, it may be the last rally of the group for sometime.

If seniors fail support, I will get stopped out of a significant chunk. I may even start considering the short side of gold diggers.

If seniors fail, one way of staying involved with precious metals may be to long the metal and short the miners depending on how they perform against each other. That kind of play may be made more conservative by selling strategic puts against the shorts and calls against the longs

Have a Nice Day!