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MARKET WRAP UP 09/28/10
Throughout the month of September, aggressive bulls have been, by far, the type of traders who have been rewarded the best by Mr. Market. Thus, when we saw a sharp selloff this morning, including some flash crashy action in $AAPL, it should have come as no surprise to see the bulls come in to buy the dip. With the S&P 500 closing the session up 0.49% to 1147, those aggressive dip-buyers are going to need to be disappointed at least a few times before they throw in the towel if the market rolls over.
Despite the reversal higher today, the bulls still must contend with the serious resistance at 1150. Thus, the tension continues to build at this juncture. As I noted throughout the day, we printed several hanging man candlesticks across the leading indices, sectors and stocks. However, that fact alone is not reason enough to turn bearish. As sloppy as today was, we are still digesting the gains made during last Friday’s rally.
The temptation on a day like today is to overtrade. With all of the progress they have made over the past month, the bulls still have the short term initiative. Rather than extrapolate too much from today’s action, I elected to simply hold my positions and make no changes to my portfolio, until there is a market move with more staying power than that which we saw today.
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Chess too many people are bearish up here for no reason. I would be worried about the XLF, but besides that everything else is pretty much consolidation action underneath resistance. A lot of people are trying to short the market and getting crushed. My view stay on the sidelines if you cannot control your emotion and views of going short up here at these levels. I still remain in buy the dips mode as that has been profitable and I have outlined that in my videos. In any case I like how you keep a clear mind and wait for signals to put the pedal to the metal. Keep up the awesome work.
ditto on what Chris said
Chess
I’m reading more and more of the “risk on trade”. Scott’s note that: the HFT algos trade solely off Forex, coupled with your blog about AUD/JPY’s import give me pause on my bearish thesis.
Could you expand upon the AUd-JPY and why this rather that canuck, euo or usa relationship to jpy is THE risk-on belweather/indicator? Also a few words about currencies- didn’t i read that Forex is a far larger cap mkt than equities? This is the Big Boys pool then; and a leading or coincident indicator for equities? Thanks, still a daily follower.
Aussie is so heavily tied to commodities. Yen is tied to risk aversion. Thus, the relationship is a rather pointed one compared to other currencies. I agree, that it can often be seen as a leading indicator.