Market TAO Friday 11-27-09

As I have mentioned in previous posts, the markets are looking for a catalysis to spark a sell off...

Thursday announcement of the Dubai Credit crisis has put the world markets in a state of extreme concern.

As I am writing this markets world wide hav sold off 3-4% overnight. Th US Dollar is at an all time high short interest at 94%. When the Us Markets open the morning I expect a major rush from the equity bulls and the Dollar Bears all running for the door at the same time.

There have been plenty of signals warning of this event and it now looks like we are looking into the abyss once again.

Above is a 15 min chart of ES SnP Futures I will be watching this very close at the open ....
As you can see it sold off substantially overnight. This will translate into a very large SPY gap down . I anticipate a bounce up into the yellow Fib retracement zone before a resumption of the sell off as you can see, there may be support at the red Zone .

My Spy plan today Is to Buy Spy Jan Puts on any bounce into the yellow zone ..Scale in on 3 buys 38% 50% and 62%..This may be a hold over the weekend play particularly if we break and close below the red zone.

A good Spy conversion rate is Spy 10 cents for every Es futures Point.