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MARKET WRAP UP 09/09/10
After opening up to 1110 within the first several minutes of trading, the S&P 500 saw several whipsaws on the way down to close the day up 0.48% to 1104. Volume remained light in the face of the Jewish holidays this week, and breadth was decent, but far from inspiring. Continuing with an ongoing theme, the broad market has been correcting in time much more than in price. The attempt at a breakout this morning was rather quickly rejected, and we continue to chop and churn along the 1100 level.
The present situation is as neutral as it gets. We are in a broad, multi-month trading range, and we are consolidating near the top of that channel. To presume that this consolidation is automatically bullish or bearish is pure guesswork. Thus, my portfolio has returned to a defensive posture. I have a heavy cash position, yet again, and I am hedged with longs ($CMG, $CTXS, $ROVI, $TQNT) as well as some short exposure (long $SRS).
I am still of the belief that many individual issues, as impressive a run as they have had over the past few weeks, need some time to come in and digest their recent gains. That event would also have the added bonus of providing higher probability entry points for swing traders than the opportunities we are seeing now. Of course, the market has no obligation to make our task easier. We cannot control that. Instead, what can we can control is our risk profile.
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why do you chose a Real Estate ETF to hedge your other longs?
Hubbs
See previous post.
thanx. i got that. unlike the others on this site, i see that you don’t use vxx or tza to hedge your longs. any reasons for this choice?
They are both fine hedges. In this particular case, the $IYR chart led me to $SRS.
Thanks for the wrap up Chess!
Interesting on the Transport Index there, was looking at the Index ETF of it, IYT, doing the same thing… interesting stuff.
I also noticed this AM, how right off the bat, JJC was weak and kept getting weaker during the day. I saw the inverse of this last week, while the market was selling off, JCC kept ripping higher and higher and higher.
Interesting interesting.
True. Very interesting.
Always enjoy your evening wrap-up Chess! Still waiting for a break one way or the other to get more heavily invested, but for now it’s all about the shorter term trades and staying comfy at home on the range.
Now is the time to short LULU.
Chess – nice move covering your LULU short yesterday – now that it’s spiked up 10%, do you see sometime in the near future as an entry point to jump back in on the short side?
Thanks.