Short covering

What a day. Cash nasdaq +168, dow +813 and s&p +92 right now. We were over-due for a bounce, but jeez.

As we're still in a down-trend, I don't think the worst is over yet. I want markets to go up and up so that econ is going and I can get out of my lumber trade, but you don't see many 'V' bottoms. Bottoms are usually rounded and happen after a long range-consolidation whereas tops usually have inverted V shape.

Think of this way. We went straight down for a few days in a row without any pullback. It was absolute panic selling. Pros, who still have a lot of money, are thinking if you missed the boat to short, what's the logical place to short. Pros seem to wait for pullback (especially in indexes).

I don't know if we'll make a new low or not, but I think we'll have another downside to make either a new low, or a higher low. What traders should look for is the move between a well established resistance to the Friday's low. 1060 level in ES seems like a good level to go short, should we get there.

Keep in mind that it's an options expiration week (10/17). People probably loaded with puts and scared money is in the puts side. Markets will try to make them as worthless as possible. This might conincide with a rally to 1060 level, so let's see.