I offer only one chart today - the 15minute chart for the last 20 days.
This is not the holy grail of charts. It is merely good for a simple, but very important observation. For the very first time in a very long time, the market actually consolidated at several levels on the way down. These consolidated levels should provide just enough resistance to keep any rally attempt in check. We see the 1059-1060 level working already - holding us to the top trendline of the down channel. Levels at 1062-3 and 1067-68 will also keep us contained if we break out from here. To break these levels, there will need to be a lot of buying. Who in their right mind is buying now?
Finally, we are of course over-bought and a quick glance at some of the major financial firms shows we are trading within 20% of ALL TIME HIGHS. Yes, 20% of ALL TIME HIGHS. Look at GS if you do not believe me. This is very important, because Financials have led this rally and they are simply running out of head room.
I am now going to short individual stocks - with an eye on the financials. This combined with my broad based shorts on the S&P and the DOW should pay handsomely in the coming weeks.
Having said all of this, God knows this has been an irrational period, and if we break out from here to new highs on volume, I will give up my career as a trader and get into something far easier, like brain surgery!
Good luck - and no worries!
10 comments:
Futures are looking strong, but I also think it is unlikely we break out. Will take another position tomorrow. I'd short the futures right now if I could.
David , I don't hope you don't need to become a brain surgeon.
I have not forgotten the seller at 73 74 , should we get that high.
I also watched Yum today. more sellers then buyers on the 2nd day
-60cent ish.
I have looked at the estimates for the 1/4 for Banking stocks
there are a-lot , of softballs there for the majors.
As the futures sit at +10ish Madness, over 4cent of AA. wow
Best of Luck David , I enjoy you blog and thank you for your help.
Hey KPH,
I just shorted the futures when they were +10 witha tight stop. Let's see if this plays out!
Hey Payline,
Let's hope I don't take up brain surgery, for the patient's sake at least!
The truth of the matter is that I love to trade and I am lucky to have enough skill and discipline to do well with it. Even if I take a beating from time to time on a perfectly logical short position!
Good luck fellas - and thanks for your comments.
David, I'm quite new to trading and have really enjoyed your blog posts. Coming from a software development background, I have enjoyed the technical nature of your posts. It has also been fun to see some of the different trading styles represented on the HMS blog. Thanks for sharing!
david, a number of people think we're headed to 1100...
BG,
Welcome!
KPH,
1120 is a possibility on the charts. I think I discuss 1120 as the next level if we break-out above 1060. There are some big sellers along the way...
David, what are your thoughts on USD though? if $ goes down, and that will push s&p up...do you anticipate a dollar bottom soon? Thanks again for sharing your knowledge..
ww
It seems that the $USD question is the big one on every traders mind. I can't pretend to know if the dollar has bottomed or not - though it seems to me the bottom for the dollar index is likely going to be down around 72. Short term I think we see support at the current level. I do believe that at some point soon, the dollar and the S&P will decouple. The reason being that one can consider both indexes "broken". S&P can not continue to rise, even if the dollar continues to fall.
Thanks for your post - and welcome!
David O , that 66 to 67 Held up .
take care
Hey Payline,
It held up - but the market seemed strong at points. Thankfully, it showed weakness at key levels and times. Specifically, 1070 during lunch and 1067 early morning and late afternoon.
This tells me that there are professional sellers "turning inventory" at those levels.
I think the best we can hope for is containment tomorrow and a down week next week.
Later!
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