I am holding a couple of shorts into the weekend but it is a dangerous game with VIX so high. With VIX above 31 we are likely to see some nasty action. Coincidentally, "11th Hole" video is scheduled to be released on May 17: http://www.huffingtonpost.com/2010/05/07/joslyn-james-porn-tiger-w_n_566941.html?view=print (warning mature content) i will be working on some charts, please contribute with your outlook for the coming week.
I'm not especially concerned about the selling, it's probably Euro banks and institutions selling now that SPX has skyrocketed on EUR terms. They need the money and now is the best time to cash out.
I'm holding stocks with less beta that have sunk a lot, in case the market decides to swing up. RIMM & JPM. RIMM behaved itself rather nicely on Friday, after dumping Thursday. And I was able to capture X at 51.97 on Friday.
extreme VIX and "the persistent Friday effect" are two things that may help you. i like to quote the quantifiable edge blog because the author has some nice studies that have proven spot on many times. the Fri-to-Mon easy money is puzzling but it did work again last week with 4% gain. but i am betting on the downward momentum from last week.
picking things that work out of a bin/group of possibilities is known as "cherry picking" Gee, on down Fridays this past year, it has been nice...
the investors are weary but still on the bullish side. this is inconsistent with a major bottom in place. to really bottom out we need to see some investors screaming. i am thinking "Dow breaks down below 1000" headline may do the trick. This is still 7% away. 1 What would best describe your stance heading into the coming week of trading? Bullish 46.41% 233 votes Bearish 42.03% 211 votes Neutral 11.55% 58 votes http://www.thestreet.com/stock-market-news/10603675/poll-bull-or-bear.html?kval=dontmiss
to add some anecdotal evidence to the bullish investor sentiment: a friend of mine bought last friday May 7. he is not a market timer and likes to sit on his positions for as long as possible. i don't recall him making many great investments so i am guessing that he is wrong again about the uptrend continuing. what do your relatives, friends and random folks say about the market direction?
to add some confusion to the sentiment, i will quote mark hulbert: "Consider the average recommended equity exposure among a subset of short-term market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). This sentiment index currently stands at 20.5%. That's more than six percentage points below where it stood a week ago, despite the Dow being several hundred points higher. Since the usual pattern is for advisers to become more bullish as the stock market rises, this is a surprising development. It suggests that there is a strong undercurrent of skepticism among investment advisers about the market's ability to rise. And that's another way of saying that there is a strong wall of worry that the bull market can continue to climb. " http://www.marketwatch.com/story/sentiment-picture-improves-further-2010-05-14?reflink=MW_news_stmp so, while the investors are neutral-leaning-bullish (see my post above), the newsletter writers are extremely bearish. if one wants to be a contrarian, it is not clear which camp to fade
my friends and relatives are lathering at the mouth to get back into this market ASAP. they are all bottom calling. myself, i just bought a house for cash, i am not buying stocks until medium term prospects become visible, which they are not at this time so my observation is that retail investors are eager to get back in because they are greedy, but myself i wouldn't buy anything (trading aside) that i couldn't rationally justify as a value investment