MARKET WRAP UP 08/16/10
Despite widespread talk in the media over the weekend about the dreaded “Hindenburg Omen,” the market put in a rather unimpressive session today for both bulls and bears. With the S&P 500 closing up by 0.01% to finish at 1079, we have now put in a third straight doji day of indecision after last Wednesday’s bloodbath. To further support the idea of indecision, volume was weak, while breadth was mixed.
This type of market action frustrates the majority of traders, including bulls looking for an immediate rip higher, as well as bears looking for continued downside. The prevailing emotion tends to be one of disinterest and apathy, as the concept of the summer doldrums reinforces itself. Despite the temptation to dismiss this price action as random, manipulated summer shenanigans, I see a rhyme to the market’s reason when I look across the daily charts of the major indices and sectors.
As the updated and annotated daily chart of the S&P 500 illustrates below, the recent pullback has not held only above the key late July support zone, but has also helped to develop the possible multi-month inverted head and shoulders bottoming formation.
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Turning to other key indices and sectors, the prevailing theme I see is that the fight is on between bulls and bears at key support levels.
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With The PPT, as historically precise as it has been, indicating a rally is imminent, combined with a skeptical, uneasy sentiment amongst traders, I expect the current support levels to hold in the short term. Accordingly, my portfolio is as aggressively long as it has been in months. While I am far from being all-in long, I am still putting enough risk in play to sufficiently back up my analysis.
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TOTAL PORTFOLIO:
EQUITIES: 52%
- LONG: 52% ($LVS $MELI $LCAPA $BZ $OVTI $ISLN $RDWR $CMI)
OTHER INSTRUMENTS: 8%
- $TBT
CASH: 40%
hey chess, love the action you have been producing. thanks for all the time, and info sharing!!!
D
Yes, what he said!
Chess…new reader here. Love your blog. Can you explain the TBT instrument? I’m new to it. Looks to have capitulated today? Thanks for your service!
Double-short bonds.
Yeah, what they said. Thanks.
I think by the end of 2010 the head and shoulders/or inverted will be discarded as a metric. Dude, where’s ,my market without intervention?
Chess! Did you get stopped out of OVTI?
COCO is giving you your hammer right now. I picked some up this morn @ 5.12