I changed my mind again, Sunday 10/9/11

On Tuesday I had open orders to sell 1 lot of FAS at 11.65, 15.65 and 19.65. I began weighing the possibility of a continued downtrend in the FAS, which would suggest selling somewhere below the declining 20 MA is warranted (11.65) vs the possibility of Europe putting together a $3-5 trillion dollar fund to address their sovereign debt issues, which in my view would send the financials rocketing higher for perhaps weeks, months or even longer. I am also aware that the Best Six Months of the Year switching strategy popularized by the Stock Traders Almanac, is due to generate a long entry signal any day now. 

Putting all of this together, along with targeting large swing trades gains over multiple months instead of smaller swing trades gains over multiple days, I decided to pull the order to sell 1 FAS lot at 11.65. On Friday morning, the FAS hit a high of 11.67 around the open and then sold off pretty much the entire day until the close. My order would have been hit, and I would have pocketed a 10% gain on that lot which would have been nice, but I am still fine with having pulled it. Based on the current chart and my view of what might happen over the coming days, weeks and months, I would rather be targeting 50%, 90% and higher gains over this time frame. If the downtrend continues, then I still have 3 more lots to buy, and I am confident that I can manage the average cost in an advantageous manner.

FAZ appears to be carving out an ascending triangle since August. Ignoring the news and just trading off the technicals, suggests to me that the correct side of the Financials trade is to still focus on the short side. But for the reasons noted above, I am currently focused on the long side.

The European Financials that I have been tracking continue to carve out a basing pattern (UBS, BCS), or a pattern of higher highs and higher lows (DB).

The US Dollar Index continues to break out higher from its base, while the SP500 continues it choppy move down.

Gold looks like it is trying to hold onto its daily uptrend, but Silver looks like it is continuing its downtrend, with a series of lower lows and lower highs.

Disclosure: Long FAS.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk...my positions my change at any time without notice***