tricky family situation... Since I don't have any bias at this moment I won't write anything and just fire off the poll. Hopefully we will have somebody with a less cloudy crystal ball to contribute their opinion on market direction while I am sorting out various charts.
I am hoping it's bearish. I want to pick up some good dividend paying stocks as part of my core portfolio. The yield looks better when the prices are down!! I hope the pull-back on Friday is just a break for buyers seeking discounts. I don't want small dscounts.. I want BOGO!
here is one study focusing on extreme readings of Capitulative Breadth Indicator (CBI). the post has a large table that i don't want to clutter with here. two points: 1) on Thur CBI hit an extreme that historically lead to gains of a several % in the coming days/weeks 2) the gains frequently were accompanied by large drawdowns now back to current situation: we had SPY reversal of 1.5% o/n and +3% intraday (or to put it the other way, we had 1.5% drawdown) on Friday. basically, the above study is being played according to historical patterns (gains+drawdown) which is good. But, now that SPY advanced 1.5% (or 3%) would you bet on more upside knowing that drawdowns are likely just based on the above study? I don't feel comfortable placing large long bets here. Maybe I will change my mind after reading more charts. http://quantifiableedges.blogspot.com/2010/05/cbi-junps-suggesting-themarket-will.html
Here's a great example of a guy who's greedy: Next resistance is the 200 day SMA, around SPX 1102. We should run over that as if it were a small pothole. After that, drop your shorts, shortie, cause we're goin' up!
this is what's going through my head is preventing me from going long except for quick swings. back to May 6th: 1) i was shocked how much we dropped intraday 2) i was even more shocked when the media reported it all as "fat finger", "mistake", etc. at that time my deep suspicion was that the market simply wanted to go to SPY 105 and we will get there again sooner or later. my latest shock came on Friday we we did touch 105 again. i did not expect us to get to 105 THAT QUICKLY. Given the speed of the down moves I am deeply suspicions now that the market actually wants to go EVEN LOWER. At the same time, with such sharp down moves, sharp short-lived bounces (like Friday's) are to be expected. Therefore, will try to play those bounces but will not hold for longer than a day or two. That's my game plan.