If you would have told me a few years ago, that I’d be trading QID based on votes I was watching during a voting session on CSPAN, I would have laughed… but that’s how I traded today.  Interesting times.

In the end, the SPX and Nasdaq closed below long term trendline support.  This stretches back to October of 2007.  Ugly for the bulls obviously.  This channel trendline has been overshot before in Jan ‘08, and March ‘08.  Both times the SPX was back in the channel within a week.  This will be the 5th wave down on that channel, with each wave lasting 5-7 weeks. With the VIX whacking an all-time high of 48.40, we’re  due for a bounce soon.  If they reform this bill or pull something else out of the magic hat, this could be a significant bottom.  Still a hit and run market though.  Wait for those higher high candles to buy.

When you stop trying to force trades, it’s amazing how many will just appear.  Yesterday morning, I caught some good trades going long, as the NASDAQ formed a higher high candle on the daily chart.  We were due for some type of rally.  It helped that the VIX was back over 35.

So when I saw DIG clear its five-minute high.  I pounced.  The ETF moved to the 200 moving average on the five-minute chart, where I took profits.  I’ve said it before, and I’ll keep saying it.  The 200 moving average is an awesome tool for targets when used on intraday charts, such as the five-minute chart in this case.

I’m not going to get political, because that’s not what trading is about.  The perception on the street is important though.  I’m sure you noticed that all day long yesterday, it seemed that this bailout package, or whatever you want to call it, would definitely get done.  The market was moving up on that perception.  You have to take profits into that.  There were little facts, and only guessing games.  Now look at the perception of today.  The bailout package negotiations failed.  The market is sad, and stocks drop.  Everyone knows this package is going to go through, Yet, if you compare the reporting today, compared to yesterday, you’d think it will never get done.  Take advantage of that.

DIG gapped down today.  While I still think it will fill that gap higher, I pay attention to the facts.  There was the potential for a failed buy signal.  Which occurred.  The 20 and 50 day moving averages were sloping down.  That’s negative.  So I’ve got a few reasons to still stay bearish.  When DIG lost its pivot support of 70.54, I bought DUG.  The stop was placed below the low of the day.  The 50 day moving average is also a good spot for targets.  DUG stalled at its 50 day moving average, and pulled back from there.

I’m a big fan of stocks and indices returning to fill gaps.  You’ll notice the XAU and gold stocks are filling the gap from last week.

Oh.  And guess where the NASDAQ stalled today?  The 200 moving average on the five-minute chart.