CHOP CHOP

Twice stopped out for a full 1 pt DIA loss, as noted in comment section of each signal.

What is happening now?

12:32PM October 28, 2008 Tuesday

Put/call went from very low in the first 30 minutes as "call sellers" dominated the action. Call selling is bullish as it is usually done by nervous longs and therefore is showing that there is a wall-of-worry.

The only problem with a sharply declining VIX is that it leaves VIX oversold. The drop from 80 yesterday to today's sub-72 low meant that prices were ripe for a correction.

From 10 to 11AM, VIX rose back from 72 all the way up to nearly 79, which of course, shows fear and justifiably so... the stock market futures had fallen from near 8500 to 8150 or 350 points from peak to trough.

While the stock market was dropping sharply, the options volume swung around from the call side over to the put side and this meant that options players are buying puts and driving up the price of options. Rising VIX also means that options market makers are afraid of providing liquidity and they need extra room to maneuver around orders that come in to handle the hedges that need to be placed if a buyer does in fact arrive.

What I am looking at now is the Yen. Because the Yen has broken down under a recent low at 104.60, it suggests that the pressure is OFF of the financial system and prices can rally easier.

I'll make a 3rd attempt to buy the DIA today -

83.11 last.

Risk 1 pt.

Target 2 pts. Once up 1 pt, raise stop to breakeven.

Raise stop to breakeven after 1 hour also.

12:45PM 83.26 now...