The Three Blind...'s  Instablog

The Three Blind
Send Message
About Three Blind Mice Welcome to The Three Blind Mice . Here at the, our focus is generating daily trading ideas in the Stock, Currency and Futures markets for Investors, Traders and Brokers. We depend mainly on technical analysis (COT Analysis, Elliott Wave Analysis and... More
My company: - The Three Blind Mice
My blog:
T3BM-The Three Blind Mice
  • Thursday's Closing Comment 5/6/2010 0 comments
    May 6, 2010 10:39 PM

    Bottom Line: Fat fingers are to blame. Whatever the reason, the timing of the decline was more of a surprise than where we ended up.

    It’s almost laughable. For those of you watching today’s meltdown in real time, you probably agree the decline felt surreal. Although we were advising caution for weeks, even we were caught off guard. You could say we were in the right casino, just not sitting at the table at the time of the fallout.

    Targets for several markets and commodities were reached, and then some. Today’s sell off was the worst day since 1987. But crashes are rare so close to a trading top. It normally takes more of a trapping sequence and an even higher level of complacency to insure that the last guy is indeed in. This was one of the reasons we felt we would see another minor push up before we saw the likes of what happened today.

    As expected, today's internals were absolutely horrible. OTC volume exceeded 4.4 billion, which is huge. Down volume beat up volume by nearly 24:1, and almost 20:1 on the OTC. Not much you can say about that. There wasn't much that held in well.

    Our challenge looking ahead is to figure out how today’s decline fits into the larger degree wave count. If we’re falling in 5 waves from the high (daily and weekly charts), than it’s pretty easy. This tells us the price top is in and all the caution we have been preaching was worth the effort.

    Tomorrow’s jobs number sets the stage for another interesting day. The now oversold and bearish sentiment extremes should allow for some relief, which is confirmed by the wave structure we see. It would come as little surprise if we bounce off the jobs number, and break to an even lower level early tomorrow. If today’s intra-day sequence was indeed a wave 3, we should see a minor bounce (wave 4) followed by one more move lower to complete this leg down. From there, the stage should be set for a pretty good bounce.

    Our trading sense says to focus on the Dollar, Bonds and Crude, since all exceeded our targets. A few names appear to be close to finishing up 5th wave declines, which means we can expect a counter-trend bounce at the very least. FCX, RIG, WLT and POT come to mind. These are ripe for an A-B-C patterned bounce, which we know is a set-up to sell into.

    On a side note, the Aussie and the Loonie both fell hard after reaching their longer-term upside targets and if this weekend's COT analysis confirms it, we may have witnessed the end of a commodities counter-trend bounce that started in early 2009.

Back To The Three Blind's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


  • Tuesday's Closing Comments 01/05/2010
    Jan 5, 2010
  • We are buyers of FXE (142.62) here looking for a trade back up to $145. There's greater bullish potential, we are looking for a scalp.
    Dec 22, 2009
More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.