After yesterday’s melt up, today we are well on our way to putting in a low volume, summer Friday doji day of indecision. As I noted last night, we are just below the 20 day moving average on the S&P 500, which is sloping down through 1087. We have not closed above the 20 day moving average since May 3rd of this year. Moreover, we have not so much as tagged it since around that time as well. So far today, we have slightly gone over it at 1088. A close and subsequent hold above the 20 day would encourage me to go long.
For the rest of today, I will likely stay in my 100% cash position. Many of my readers are in heavy cash as well, judging from the comments I receive. However, that is not an excuse for us to turn off our screens. There are, indeed, stocks setting up in both directions.
Some stocks that are above all major moving averages, and have held up very well on the long side are:
$RBCN, $CROX, $AKAM, $VMW, $CRM, $NTAP, $LULU, $SAPE, $MDAS, $PTV, $HAIN, $HNT and $SWKS.
Keep in mind that if the broad indices roll over early next week, then these long setups will have been for naught, as at least seven out of ten stocks move in concert with the broad market. So long as we remain below a declining 20 day moving average, it remains difficult for me to see the proper risk/reward in putting on longs.
As far as the short side is concerned, I will be looking for inverse ETFs if the opportunity presents itself. A rejection of the 20 day moving average on the S&P on strong volume next week will likely take us to new lows. Thus, now is the time to be exceptionally prepared for whichever direction Mr. Market chooses to go next week.
Keep it up Chess.
I’ve been holding in cash lately. Thought about getting in the TNA trade, but didn’t have time to monitor. Oh well.
Thanks duck, don’t worry about the TNA trade–it was a very quick one and was more so a play on very oversold conditions, rather than a healthy market.
duck, I’m pretty sure Fly said basically the same thing as chess, but he said it more fly-like. Something like 300 quick points, and then we resume to somewhere in the 9000s. I can’t find that blog comment though.
FYI: Mostly cash position here too. Appreciate your blogs. Glad to have you here. Thx.
Thanks dumas.
Thanks Chess,
I’ve been looking at some of the same longs, specifically AKAM, VMW, NTAP, & LULU. Also, I find ACME, APKT, ARUN, DECk & GLD kind of appetizing.
However, should the market rolls over, I’m not quite certain what to do other than short the SPY. Those 3x etfs, e.g., FAZ, scare the shit out of me.
Seems like TNA is especially “reactive” to market moves. Fly probably loves TNA since he scored big on it from about S&P 700+ish. Maybe it was in the 800’s? I can’t remember. Fly scored crazy coin on it though… as Fly always does.
Woops,
Sorry about ACME!
I am way to adverse to risk for that one. I was looking at it and it got in this list by mistake.
But here’s another one that looks pretty good to me. How’s about SXC?
thanks again for the post.. i’m still in 100% cash …. waiting patiently…. finger on the trigger… i find it useful to distract myself with movies playing in the background… it quells my *need* to trade but doesn’t take away my feel for the market…
hopefully we’ll go lower once and for all early next week and get the long awaited drop over with already so we can have our summer rally up to 1170!
Thanks for reading.
A summer rally would be nice, but you know as well as I do that we can’t force it if its not there.
Wednesday’s reversal from support at S&P 1040 and Thursday’s rally could be the beginning of an intermediate-term low, but we need to see more development.
Although the bounce over the past two days is a positive, near-term it is premature to think that the risk window has been shut.
My chart guy is saying that some of the weekly indicators, that measure 1-2 quarter shifts, which peaked in April/May, are unwinding into oversold territory. But they are unlikely to fully bottom and turn positive for many weeks possibly well into Q3.
This suggests the next few weeks into quarter-end and earnings season are likely to remain pretty volatile and short-term trading orientated with S&P 1040 an important new line in the sand. Below 1040 next support is 1000 then 955.
VXX could be good trading.
Good day and have a good weekend.
Is your chart guy TA? That guy is the best.
No.
My guy is an intermediate and long cycle guy.
TA is shorter term and a trader.
Both good.
Nah, I’m just a trader like everyone else, if you want some real TA talent check out these guys on twitter
@gtotoy, @traderstewie, @HCPG, @zortraders, @traderflorida
Haha… rich AND humble? Never change TA. Never change.
thanks alpha–you too
Don’t call it Doji until it is so…many patterns could be made with 2 hours left to trade, even on a slow day
very true–good point GET
Indeud
Cool lookin eyes on wolves.
Very nice consolidation today but the 1100 looms large as does the 200
Risk names outperformed the index for the 3rd day in a row, it’s been a while since I could say that
Of course we could be building the right shoulder and roll over, who knows – get above the 200 and you’ll get a lot of believers in another run to the upside
Sold some puts on MTL as a long, 1/2 position
NFLS, VMW, CRM and CMG have the nicest momentum patterns
Favorites AAPL and DECK are too loose for my tastes
TA,
Are you saying you already have half positions in NFLS, VMW, CRM and CMG.
I’ve been looking at those too and really like the tight pattern on VMW.
Ah, you’ve discovered RBCN. That’s a rocket-ship. Good for you.
Love the posts…keep um coming!
In case it’s of interest to anyone, my fast timing trend system (I have three) gave a buy signal today. This one caught the market up trend a month before the last one of the other two in the beginning of March 2009. Just so no one get too excited, it has whip sawed me terribly in the past also.
Chess,
Can you tell me on PTV if the large gap up on May 17th has any significance from a technical point of view?
Thanks!