Well, there you have it. A nice rally to a new top on expected earnings surprises...
We have touched the top BB on the daily close line chart of the SPX. We may drift a bit to the right (within a 10-15pt range), but this puppy is cooked. Let's see if price action can survive BAC, C, and GE. I have a funny feeling that the party is over.
I am going to add to my short position this week. I am short the ES, short SPY, short DIA. I am going to buy some Oct, Nov. and Dec. puts AND add shorts on specific equities. Which equities? Any equity that is 20% or more above it's 200pMA and 4% above it's 20p MA is a good candidate.
Look for reality this week.
Good luck.
Subscribe to:
Post Comments (Atom)
25 comments:
I went short again this afternoon as well, primarily in the late afternoon. I covered a bit on weakness afterhours, but will short a bit more tomorrow. We will likely get strength on GOOG, IBM, GS, possibly a few others, but I am going to build a nice little short position here. Tough life, huh? I do think this is the blowoff, however.
Hi, David, i had the same intuitive feeling today...and in fact, i added a little to my short positions. I had made several mistakes to act too early ( shorted s&p last year since March 08...was a long wait)...I hope though this time we are not far from the turning point. I appreciate your post and good luck!
ww
Hi David
Am I seeing these things correctly?
We are at, or just a punch over the top of the trend line , that looks like a rising wedge. (From march)
The longer term top trend line from Oct 2007 down thew the bear rally tops comes down somewhere 1100 ish or so
There a gap from last year from about Oct 3 at 1099ish.
So we are likely to move back down to stay inside the rising trend line from March low and perhaps move back up to fill that gap at 1099ish in a day or two.
All of these put us near the 50% fib retrace.
The long term top trend line from Oct 2007 should be a brick wall .
breaking it would be Bully Bullish
I cant tell what wave we are in EWT:)
Your thoughts ?
David,
I enjoy reading your site. When you say your going short DIA, Do you mean the dow jones or diamonds trust?
Thanks
SJ
Hey SJ,
I am short the DIA (Diamonds) on the cash side and will be short the YM next (mini futures contract). Same thing with SPY and the ES.
Thanks for posting.
Thanks David,
You seem to be in tune with the market. I too had the same thoughts today, Watching tomorrow for a good entry on the short side.
SJ
Nobody thinks we get a pop on GS?
Hey Payline,
I study this wedge - but I I don't rely on it for determining a top so much. You are correct in that we are back into the wedge and within 10 points of the top line. The significance of the wedge is that they typically characterize bear market rallies.
I prefer to use the fib retracements for determining the key levels of resistance and support. 1120 marks the 50% retracement of the drop from the very high to the march low (on a closing price chart). This also alligns with the top band on the weekly Bollinger band. Historically, we do not actually touch the top band - so we have less than 30pts of head room as of today.
In terms of broader trend lines, if you view a weekly line chart (using closing numbers), We closed right at a level that connects via. a trend line from the October 08 high through the May couter rally top and today.s close. Yes, we have three points of intersection - but I would have prefered 4 or 5. Still it is a trend line and should provide resitance.
Not sure which gap from last October you are referring to - perhaps you mean the gap left in the charts these past two weeks? Gaps do tend to fill - so yes there will be some gravity there - but when we can not say.
We have two bottom trend line options to watch. First, from the march low through the Jul 10th pullback bottom into the October 2 pullback. This is the major trend line. And this does not give us a very encouraging picture. If we follow history - it may three months before we see that one again. A secondary trend line connecting the Feb 23rd bottom, March 20th, Jun 22, Sep 02 (almost) and Oct 2 is also present and is now crossing down and across the main trend line - this indicates that we are starting to roll.
I can not easily identify an EWT at this point.
At this point we need to see how the market reacts to C, BAC, and GE. GS is a forgone conclusion.
I don't think this has the legs to rally far- it is just going to feel a bit uncomfortable at times.
Good luck!
Hey KPH,
I actually think GS will crush their numbers - but I am not sure it will matter if BAC and C can't match it.
I really think there is going to be some negativity tomorrow - but my positions are purely technical.
Cheers.
Kph , pop on Gs , could be ,
My Guess is JPM set bar to high , anything but a BLowout will disappoint, up 7.27 today alot to live up to.
I am just guessing here.
David , Thanks
"I don't think this has the legs to rally far- it is just going to feel a bit uncomfortable at times."
Yep it has been uncomfortable.
Best of luck
Oh , the Gap I was asking about is Oct 3 2008 on my 5 min chart .
take care .
Hello David,
are you shorting the market based on fundamentals or technicals?
The momentum is clearly on the upside. It has been so since March and like a huge locomotive gaining traction, there is little sign of it going anywhere but up. And the fact that it is climbing that proverbial wall of worry is a good sign. No bull market ever began without a wall of worry, so they say.
Yes, its been uncomfortable for shorters, but using discomfort as a signal that something is wrong is best left to the doctors.
Hey KPH,
I can make a strong case for shorting on fundamentals, technicals and sentiment readings. However, I try to rely on technicals only.
I think the points to the up-side are going to be much harder from here on out. We got a taste of selling a couple of weeks ago. We'll see more again this week.
We are actually rolling with some expected volatility.
I would not be surprised by a down day tomorrow.
Good luck.
Here is my EWT guess ,
I count 7 waves from the July low .
I think we are in an extended wave2
( I know it tops w1) but my guess Oct 2 low was start of wave 2.
Best of Luck for everyone
David O, I am not KH. I do think that we will get some upside at some point in the near term, like him.
KPH and KH,
Sorry for the confusion.
If we can get a retest of 1086 - I think we breakdown another 4-6pts today. Not much more as there is still hope for GOOGLE and GE this week.
Good luck out there!
David and KPH, The market seems very strong still , stronger than I expected, There sure could be some more upside here.
Bac at the end of the week .
My best to everyone
judging from Google's upbeat press statements on advertising fees a few weeks ago, I would say GOOG results should outperform, but most of it has already been priced in. There should be some selling on the news.
But what is worrying is the immense amount of cheap money in the market( not like you guys don't know these stuffs already).
M2 supply in China is expanding at a rate of 20%(annualized) every month. Wont be surprised if some of them trickle into S&P500.
payline, like David O I think we will be choppy here as we top out. USO looks like an incredible short here. I was short earlier but covered.
Kph , careful uso is moving the other way, wait for it to move to you .
Ok who knows what to think of today ?. after house interesting
10pt range on the day with most rallies being met with counter trend declines - drifting upwards in anticipation of the "surprise" earnings beat from Google...
Gave back the final 4 pts immediately in afterhours future trading. GOOG pops AH and immediately declines. IBM down 4% AH, GS down 2%, JPM flat...
Hmmm, feels like pump and dump is in full gear.
Bought some Nov. puts today for SPY and DIA. The highest volume strike prices for Nov SPY are the 100 and 98 with approximately 20 times the average volume.
What does that tell you?
Pardon me, GOOG is fluctuating between up 2% and flat - after being fown 1% on the day.
Yah, I'm going to sell a bit short AH, but will also keep some powder for tomorrow. I think we could go down a bit tomorrow but quite a bit on Monday.
GOOG is now up 3%.
David ,
I have had the " blowout " earning company's on my watch list all week
Yum , AA , Intel , all are no higher
than at release time . A carry over from the b4 time Palm was down today but still 2$ up from release.
I have also been watching the put/call ratio , and notices 5day Ave has been the same as the last correction attempts.
I could think in the money puts are insurance, or hedges , But 100 $on spy would need to be a play on the down side
Nice pump and pump in Oil today .
Watching the $, its possible we found a bottom , maybe , could it be , the gold and silver action,
While tlt was down , I think it is telling me that .
( if metals are up tomorrow forget what I said )
I stayed 100% short, as I see 25 points to the upside and 100 to the down. I have not added short either.
The loan default numbers today stunk. one day that will matter.
I still think , this is a bear market rally.If so we move much lower. I have not found a compelling argument for this being a new bull market other than $ devaluation to the point of making making the tape bigger.
Bac and Ge , will be the next big deal.
The Dip buyer is alive and well.
Institution buying and selling the xlf
A) we are blind , or B) this is a suckers rally
WW, got paid to wait last year ,
Let see what happens next , David thanks for you help , and my best to you .
Post a Comment