Basic materials again

This is kind of an update of my February 19/12 post:
http://erickstern.blogspot.com/2012/02/dow-jones-basic-materials.html.

Let’s say the 116.12 close on March 2009 was a bottom and the 336.15 on April 2011 was a top, the suggested 5 movement took 2 years, and the following retracement to 226.12 at the end of September 2011 took around 6 months. The 116.12 to 336.15 move is 220 points, the 336.15 to 226.22 retrace is 110.03 or 50% of the uptrend, enough for a complete retracement. Weeks is not a “pure” unit of time pero ahí vamos, 6 months is 25% of 24 months and since there is not an etched rule on time retracements I’d say the retracement is enough also on time units.
So it could go either way, 226.12 was the C of an A-B-C retracement or it could be A and the group is now in C.


Supporting the last is this, at this time the group is at 278.98 below the 283.11 that I called a of B, kind of eliminating the possibility that we are in a 1-2-3-4-5 since 4 would be lower than 1.

Basic materials closed last week below the lower 4 week channel, also the 10-30 weekly ma are flattening and appear ready to cross.


I am short basic materials via the ProShares UltraShort Basic Materials (SMN) which is a 200% inverse fund, I have daily and weekly stops since my complete short position is divided in 2.
For the daily part the stop for today is at 284.39, the daily stop changes every day. For the weekly portion of the short, the stop is at 293.28, this stop is for the complete week. Both stops are triggered at daily closing prices.