In the May 5th email on the $ index, affirmed the short position (sold on April 27th at 85.60), and the market has indeed continued lower, breaking below the March 19th low at 82.65 (to levels not seen since early Jan), on way toward 80.10/20 (50% retracement from the March 2008 low at 70.70) next. Though the downside pattern is still not “complete” suggesting further downside, the market is nearing oversold after the last few weeks of declines and is starting to raise the risk for a 250 tick bounce (and possibly more). Given this rising risk, will want to use a more aggressive trailing stop on a close above the bearish trendline from late April (currently at 83.45/55). Note that such a move would not change the bigger picture bearish view, but need to change the stop (more aggressive) to maintain a good risk/reward in the position. Nearby support is seen at 81.80/90 (earlier low).
No chance in the longer term since last autumn, of an extended period of wide ranging/consolidating remains in place. Currently, still view see market as completing an important high in March at 89.60, and with further declines toward 80.10 (50% retracement from the March low at 70.70), and potentially below ahead. Note however, that more wide ranging is favored, so could see a decent sized bounce (and potentially an important bottom) from the 80.10 area (50% retracements tend to work well in this market). For now, would maintain the longer term bearish bias (switched to the bearish side on the early March “false break” of the Nov high at 88.45) but will be looking for signs of a potentially important low on approach of 80.10.
