Wednesday, July 15, 2009

Possible Change Coming

Sorry for the late update. Had a long morning meeting this morning so I did not get a chance to finish the post before open.


What a slow day yesterday. As anticipated we held the 906 range by a few cents - I guess there was a reason why I kept on talking about this number yesterday. I had mentioned that this is my new line to determine short and mid term direction - bullish above and bearish below.

"A close above 904 today will be quite difficult for the bears to manage, a close above 908 will be devastating and may confirm prices to move above 918."

Well unfortunately we kind of got both. Closed at 906 and got a big push after hours into 916 range - probably worst case scenario for the bears at this point. Lets hold off until we trade those numbers during cash hours but the overnight sessions does not show any type of sell off - actually made a new marginal high at 918 around 7:00AM.

I have opened quite a lot of new short positions yesterday and unfortunately closed my hedge before the close. At this point I have no choice but to unload those new short positions again at the first possible chance. I have closed the majority of my shorts at the open this morning. At this point the market has given me signs that cannot be ignored. Month 3 in this chop zone and I have to admit its getting a bit tiring. While I will probably get a good chance to get out at a better price point on a pull back I am fine taking this loss here on my account. Pretty much given back everything I have gained for the month - same as always.

I had mentioned the importance of 918 yesterday so this will be key today. Now remember what we said about large GAP openings. It is very probable that the open plus/minus 2 points can represent the low of the day and we have a stepping day higher. This will be decided in the first 15 minutes of cash hours so at least we will have some guide for the remainder of the day.

For the bears - unfortunately if you are in a position at the moment you have no choice but to either feel the pain, add a hedge or make a longer term decision by closing out (its dry or it will rain I know). I have decided to exit out of the majority due to the current market environment and will wait for the market to show me a clearer direction.

For the bulls - buy the dips? did someone say that again? At this point the bulls have every advantage in the book. Many bearish EW counts have been thrown out, any type of sign for corrective short term bullish retracements are out the window as well. The first target the bulls are now shooting for is of course the 930 SPX range with a break of 918 already. I had mentioned that yesterday that we have a potential to break 918 for more upside and it has occured.

Special Note
What a week - I am quite speechless but I cannot ignore what the market is showing me here. Of course being a bear you have hopes that we will fail at the 930 and reverse lower but it is my feel that the bears had their chance and did not take it. I am watching the NOOB index very carefully - as some remember I use AAPL as a primary guide to identify retail buying. This specific stock generally leads the way and can be used as a leading indicator for SPX highs. From where we are today there is a good chance that we will be making a new high on SPX within the next 5 days. I will confirm this after the close today.

Overall - for me its back to vacation time on the market. I tried to position myself for a move that I was interpreting from the market moves and it did not occur. A breach of the 20dma will have a very high probability to bring us back to the other end of the bollinger band. If you are hopeful for a reversal - it can occur but it should be used to lighten up on bearish positions - at least that is my feel.

From now on - no more larger positions until we have either made a new high or broken the 870 range on the downside. I have said it before, tried to hold back but started to chase a move successfully in the beginning but with an end result of having a break even month yet again. Whatever gains are being accumliated are given back. Month 3 - check.

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