As you may have been reading throughout the course of this blog, we try to enter trades at the +100 and -100 points on the CCI, depending upon whether or not you are going long or short. We try to exit when the slow stochastic diverges from the direction of our trade. Of course, these are just general rules of thumb, as we also take into consideration the available pivot points, support and resistance and price action.

Of course, the best laid plans can be made useless when volatility reaches a point where the three minute bars may stretch from 5-11 bars, making almost impossible to stay in a trade, no matter which direction you think the market is moving. And that was the case today….it was like trying to surf in a hurricane….the waves were just too big to ride. So you are reduced to guessing which way the market may take off, which is a situation that I will participate in…proper investing goes from being a systematic artform to a binary outcome guess.

The reasons for today’s, and most of the past weeks, volatility is rooted in the continuing financial shake out in the banking system, with Washington Mutual the casualty of the day. I would expect more bank failures in the coming weeks, as we are just now going through the deleveraging process caused by the securitization of mass quantities of these subprime and Alt-A mortgages. As you might expect, Congress has dithered away valuable time in a hotly contested bail out plan….a plan that has been replete with all sorts of pageantry and theatrics as members of congress grandstand for popular acclimation by the masses. In the whole, it has been a pathetic demonstration of our democratic deficiencies. We will overcome it all, though.