SPX: Failed Double Inverse H&S

From yesterday morning:

"The horizontal red lines are the lows of the Right Shoulders, 705 and 700. They "shouldn't" get taken out to the downside. If SPX 705 gets taken down, I would view the patterns as invalid."

At Wednesday's close, I held short only AZO until I saw whether we'd get to the SPX 730-734 targets to add to shorts, or whether we'd break the Right Shoulder of the pattern, at SPX 705.

It was apparent at the open that SPX 705 would get taken down, so we had our answer. There always is risk in the market, but given that information, we can just about short with impunity. I shorted rallies and intraday bearish patterns in AAPL, GS, MS and ICE.

I generally won't short a stock that is at new highs, but as I posted the other day, the big Gap Up Inverted Bearish Doji Star Hangman in AZO on March 3 sure "looked" bearish, and it also was a possible Bearish Wolfe Wave #5 Fakeout/Breakout, so I shorted it on March 4 at 50% of the height of the candle, expecting at least a sellof back to the top of the Wolfe Wave.

Instead, AZO rallied on Wednesday, and I was under at the close. In yesterday's smackdown, AZO also rallied! It sure wasn't acting bearish. Grr-rr...LOL.

I thought that I'd be stopped out on a takeout of the high of the March 3 candle, but AZO finally started to come down. Slow-wly. In that situation, my goal is to get out of the trade at a breakeven, or near break even. I don't like to be short a stock that is showing that kind of strength, especially in a general market smackdown.

I abandoned my AZO short for a $35.00 gain.

I also shorted ICE on its rally off Fed approval of their credit default swaps clearing plan. Ichimoku Kinko Hyo resistance was at 59.80. I didn't think that ICE would get there in such a lousy market, but two analysts pumped the stock, so I got filled and scalped it for $1.00 gain.


Overall, a decent day of trading after Ms. Market tipped her hand, breaking SPX 705. "We can't know in advance what the market is going to do, but we can know what we're going to do ABOUT IT."

Mar 5 - Autozone (short).......................Gain: $ 35
Mar 5 - Goldman Sachs (short)............... Gain: $1,529
Mar 5 - Apple Computer (short)...............Gain: $1,545
Mar 5 - Intercontinental Exchange (short).Gain: $1,020
Mar 5 - Morgan Stanley (short)...............Gain: $ 586

Gain On The Day: $4,715.