In the last few days, there have been a lot of reasons for the bottom to fall out of this market. Yet, it hasn’t happened. Today, with the slightest bit of inconsequential news on mortgage refinancing, the market went from -250 to -10 in less than 40 minutes. SPY held a trendline support at 885. It feels as though bulls have enough powder left to sucker in more money on the long side. I have a bullish bias for the next 8 trading days.
November options expiration is next week. Max pain for SPY is 100. So, we can expect bulls to have another shot at the major resistance band just above S&P 1000. Hype built around the following factors could help them get there:
- This weekend G20 summit will be held in Washington DC. There will be a lot of buzz about this. I don’t think PPT will let the markets plummet when G20 dignitaries are in town.
- Senate democrats have indicated that a rescue package for the auto makers will be finalized by next week.
- Come Nov 16, I think we will hear the hype, “hedge fund selling and deleveraging is over.”
Let me be absolutely clear – I am not bullish. I am a cautious bear till the end of next week. After Nov options expiration, I think it will be open season for selling through the end of the year. I have raised some cash to buy puts or go short. I even took a long position today in UYM (Ultralong Basic Materials)
My current holdings: EEV (will probably sell soon for a loss); UYM, UA (Under Armor) puts. UA is a technical and fundamental play. Today Dick’s Sports Goods reported poor numbers and gave poor guidance. On the even Nike sold off. As you can see in the following chart, US is due for a pullback.
Am I missing something. The S&P broke 900 today, the last chance of a bullish bounce and now everyone turns bullish? I seem to be lagging because you all were right and I’ve been wrong it seems. I was bullish until we broke today, I’ve turned bearish, disgusted with this market though.
By the way futures are rallying pretty big, figures it waited for me to take a position in sds before it went up.
Don’t be so sure about me being right. I have a lot of lumps to prove it. Check out this video by Tony C., who expressed similar sentiments as I am just a while ago.
http://www.youtube.com/watch?v=XKCGoE2c8ok
Tony C’s video tonight laid out basically the same kind of prediction for the near future.
Thanks fir the alert. I just watched it. Amazing, his take is identical to mine.
Look for an up open tomorrow and then sideways during the day and red into close Thur-Mon will be down.
Any particular reason for that speculation, or should we just trust your gut?
futures are muddling , up down,up down,lets see what Europre does.
Josh,i just study the stoch’s and demand /supply..We should have one more big down before T-day.Then we should rally into 2009 as selling should be exhausted
Mohan,
I exited the rest of my EEV late this afternoon and am holding lots of dry powder. However, I’m skeptical of going long. I think I may just sit on the sidelines during this rally and wait for a better reentry on shorts, but if I do get long, what securities are you seeing that have potential? Some I’m looking at are GS, DIG, and UYG.
This is precisely why very few people make any money in this type of a market. Historically, deflationary recessions are very hard to trade. The majority is, as usual, heavily long. The few that do short are usually the hedge funds and traders. In their effort to trade the violent bullish rallies inside a bear market, they usually miss the big moves down. I, too, am bearish and have been for about a year now. However, I managed to miss many of the big moves down because of my desire to trade the bullish pops. It wouldn’t surprise me if, while all the bears head for the sidelines or go long, the market just collapses.
Agree one hundred percent. While I am playing some on the long side for now, I am also positioned not to miss any major downward move. I hope to stay that way until I see a 600 handle on S&P
I’m with Mo. I am a big bear. I missed the last rally because of that. I am now prepared to trade the market both ways. Things suck all over, but these rallys are a great place to make some coin as well. Timing them without Craig will be tough. He may be able to provide enough assistance from the sidelines to get us thru this market. Kenny’s charts will help as well.
Mo, now may be an appropriate time to exit EEV, but I would keep the powder dry. I am not short at this time. I do not use options (not yet at least – I’m not quite compitent enough to take that leap). This market cen turn in an instant, and both you and I know there will be an enormous opportunity in EEV sonner than later. There is a great article on China and their economic issues on Mish’s site you need to read if you haven’t. There are also some great posts on why the USD will continue to be strong and why the US is in better shape than the rest of the world (if you can believe that). Thanks for all of your input. If you should decide to leave here – please take me with you.