Holiday Party Mode

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This time of year features holiday parties on a nightly basis, whether it be family-related or through work. Traditionally, there is the “Santa Claus Rally” in the stock market, where even the most vicious of bears back off their shorts, in favor of sipping an eggnog Venti latte while standing behind hundreds of tourists from Iowa who fly into New York City to see “the tree” in Rockefeller Center.

This year, there seems to be a certain element of apathy with regard to the market, as plenty of traders have become understandably frustrated and demoralized with the grinding price action throughout 2011. Currently, there remain plenty of individual setups with the potential to become quality long swing trades. However, a setup is simply an ornament on my watchlist tree if it does not trigger in a cooperative market. Moreover, there continues to be troubling signs from the “leaders” since 2009, such as AMZN CRM PCLN.

You can see below that Amazon.com is a particularly troubling chart, seeing that it actually broke down from the bear flag that I had been highlighting over the past few weeks. Since 2009, the play had been to fade the breakdown, as they were usually traps to lure in overeager bears. Even if Amazon does not lose the key $180 level here, it is still far from a high probability long setup. Member “kelynntan” inside 12631 crushed this trade on the short side by owning puts. We are still short CRM, as well.

Hence, with the long/short strategy continuing to work, I am still neutral on the market with a slight bullish bias. If and when the S&P 500 rectifies the declining 200 day moving average with the rising 50 day moving average, I will change that posture.

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