there are obvious similarities in the strength of SPY gain during Sep-Oct and Mar-Apr 2010 rallies (very similar gain in the same time-span). i am wondering if we could see the sharp drop soon like in Apr-May 2010 now that we see the first signs of weakness in the bullish camp.
This begins to look like a high-level scam: "Eurozone in talks on Ireland bail out Financial Times - 39 minutes ago European ministers were this weekend deliberating whether Ireland needed European Union aid ahead of Monday's reopening of financial markets in order to further reverse the two-week-old rise in borrowing costs which has pushed the eurozone to the edge " 1. Nov-Jan huge run-up in indexes, Greek crisis, major dump 2. Mar-Apr huge run-up in indexes, PIIGS crisis, major dump 3. Sep-Oct huge run-up in indexes, Irish crisis...
My opinion is still a mixed market with recent news going to create a minor dump ( already started ) led by financials. With each recent day I grow more convinced its coming. In my opinion, there will be no major dump because there is strength in technology and commodity prices aren't going to crash. However, it would be extremely profitable to me next week if the market crashes. I just don't expect it to happen. I do wonder why ET is constantly talking about Indexes. The good money is on more specific trades. From a trading point of view the slow drift up would be hard to trade because the risk/reward isn't worth going long anymore. Give me a 5-10% correction ( with overvalued stocks dropping 10-20% ), and there will be a new chance to reinvest in longs.
Bearish for the coming week. All the major indexes broke down. Weirdly, gold and gold stocks are still OK. Marginally, but still. Contents of the following is 90% BS. But I had fun with the charts. Chart Number One: The Ascending Triangle (All prices mentioned are quotes of IWM. Behavior of the other indices/ETFs is pretty similar to this.) This chart goes back to 2008, and the descending yellow line in the triangle is the fall in the Fall of 2008. The ascending yellow line is the rise since March 2009, and the flat yellow line is where the fall started from. This shows us to be in an "ascending triangle", and the yellow line on the bottom volume bar graph shows that volume has been gradually declining as time has passed, which is what's supposed to happen in an ascending triangle. It's a bullish formation that's supposed to portend higher prices once the top line is broken through. Chart Number Two: The Past Six Months This one zooms in on the past six months, with the flat red line showing where the downslide earlier this year started. Over on the right you can see how the market leapt over that line, at the same time, it seems, ending the ascending uptrend drawn just underneath the last couple of months of prices, starting at the end of August, and ending at that leap. The bottom yellow line is the ascending line in the triangle, and shows where we could fall if this really got serious, and still maintain the trend up that's been in place since March 2009. Chart Number Three: The Channel This is where we are now. The up trend that started around Labor Day is over, and we're now, I think, in a channel, with sideways probably where we're going to go for a while. That 75 line, the yellow line at the top, which is the top of that ascending triangle, is going to prove very hard to get through, I'm sure. I figure we bounce between the top and the bottom half of this channel. I don't think we're going to break the bottom blue line. If we do, that ascending yellow line in the second chart is what needs to hold for the entire move since March 2009 to continue to be valid.
Except for the occasional foray into something I like - Corning these days - I don't do specific stocks because once every three months come earnings, and the thing could dive 50% on a disappointment. Unless you have a tight collar in place, that could wind up costing major bucks, even in a well-diversified portfolio. I do GDX and GLD, and dabble in IWM. GDX pretty much trades with the volatility of a stock, but without that once every three months excitement, and is my bread and butter. GLD is usually more quiet, and contributes, but not to the extent of GDX. IWM is more or less for fun.
comparing the three tops (Jan 2010, Apr 2010, Nov 2010(?)) from the sentiment point of view: at present there is the least amount of bullishness. At the other two tops one could really feel the bullish excitement, not now. From the contrarian point of view this suggests that we won't have a huge sell-off this time around.
Two reasons allegedly caused the dip. But both are mitigated according to some sources. Ireland sovereign debt: http://www.cnbc.com/id/38646579 Shanghai Index fell: http://www.bloomberg.com/news/2010-...-inflation-outlook-hsbc-s-mahendran-says.html
Shortie there is no reason to even have a worry about Ireland, the bailout is coming, this will send stocks and markets around the globe skyrocketing once again. This bailout news is getting extremely old dont you think. By Monday morning futures will be soaring. Buy the dip on this good news and sit back and collect risk free money.
I'm already short from Friday. There is a possibility of a trend change, but no confirmation yet. Nothing large because you don't know what nonsense will come out over the weekend (and because there's no confirmation of a trend change). I have quite wide stops. I'll add to the shorts if markets start moving down tonight and tighten the stops.
I think there is at least a 20% chance we sell off large Monday so on that basis I am still short. Friday's afternoon rebound seemed half hearted I doubt that's it and the S&P 500 is in a weird spot where I think it has to move somewhere before people get comfortable. I suspect by 8:35 am tommorrow that direction may be clear. Risk/reward says stay short but I'm ready to bail if I'm wrong.