After the extreme fear I saw last December 2012, with the Fiscal Cliff drama, on social media, my read on current sentiment is one of complacency, assuming an 11th hour deal will get done in D.C. and a monstrous rally will materialize. That may very well be the case, but the market may not be at current levels when that happens. Admittedly, that is anecdotal evidence, but the price action today is showing more signs of deterioration, with the Nasdaq and Russell leading lower. Also, the notion of a “hated rally” and “hated market” does not align with the allocations into U.S. equities, as well as margin debt, etc..
I am sticking with some shorts that are working in my favor this morning, inside 12631. I took gains on a YNDX long and cut a small loss in LULU.
Overall, I remain quite cash heavy and opportunistic as the market has become increasingly selective and divergent since May.
With respect to momentum, the Tesla proxy for momo’s in general may very well be the way to go. On the daily chart below, as a visual exercise you can see what bears need to do–Actually hold below the 20-day moving average today as a first step in technical change in character.
Also note the continued weakness in the financials, especially GS WFC.
Overall, staying cash heavy and/or least hedged appears to be the way to go.
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Nice comments. I am heavily cash, waiting on side with my hazard lights on … Friday could be ugly if nothing happens…
Sentiment can change very quickly. I am sure today will increase fear. Fluid situation.
Thoughts on EROC?
Trying to emerge from that cup pattern on daily. Keep a stop below $7.17. Still in a downtrend overall and needs more time and work to heal.
Thank you. Appreciate the comment.
You bet.