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For the past few days, I have been waking up in the morning in an optimistic, upbeat mood, only to be sucker punched by The Great Santelli and his gang of Chicago fixed income freaks. Thus, my little foray into the bond market is officially over. I sold out of my $TBT position, and will stick to stocks from now on, thank you very much indeed.
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TOTAL PORTFOLIO:
EQUITIES: 58%
CASH: 42%
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MARKET WRAP UP 08/17/10
During my wrap up last evening, I discussed the prevailing emotion in traders as being one of disinterest and/or frustration with the current market. After last Wednesday’s swoon, we experienced three doji days of amorphouse price action. Just as many traders were doubting the ability of the bulls to rally (and the bears to take us lower), citing excuses such as, “things just do not feel right to me,” and “this market is broken and cannot rally,” I noted that a more objective look at the daily charts of the leading indices and sectors pointed to key support levels holding. With paralyzing emotion often signaling some type of a bottom, the S&P 500 rallied 1.22% to close at 1092. Breadth was strong, while volume continued to reflect light summer trading.
As the updated and annotated daily chart of the S&P 500 illustrates below, we have held support exactly where the bulls needed to. The fact that we held above the late July lows is a good sign that the multi-month inverted head and shoulders bottoming pattern may be more legitimate than the head and shoulders topping pattern. Either way, a short term higher low was made. The bulls have now regained the short tern initiative after the past three days of indecision. However, as evidenced by some selling we saw into the closing bell today, this rally will be a true test of mettle for the bulls. In the face of profit-taking, they must provide an underlying bid to the market.
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Despite their victory today, the bulls have a good deal of overhead supply to contend with in the coming days, should they attempt a winning streak. Similarly, the technology bulls also held support on the Nasdaq Composite Index, and I had been noting during the past few days that it was imperative for them to do so.
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Updating some other key sectors and indices, the prevailing theme is that of the bulls holding support exactly where they needed to.
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Looking ahead, the bulls are likely to push us higher in the coming days. However, I would be surprised if we see more moves like we did today. I am looking for more of a grind higher during the rest of this week. Depending on how charts begin to take shape, combined with the signals of The PPT, I may start to scale out of some longs. For now, though, I will give the bulls a chance to take my holdings higher.
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TOTAL PORTFOLIO:
EQUITIES: 58%
OTHER INSTRUMENTS: 8%
CASH: 34%
Comments »[youtube:http://www.youtube.com/watch?v=JghkG4WydNk&feature=related 450 300] __________
Ok, Ok. So it not a textbook bearish abandoned baby pattern on $TLT. However, I could not resist. Also, any more downside should confirm yesterday’s doji marked an inflection point.
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For those of you following along, I just wanted to update a few of the trades that I have been making. $OVTI fell hard this morning on rumors that it lost its key Apple business to Sony. Of course, I care more about the price action and chart than I do the news. However, the the chart suffered some damage on the right side of what could have been a sound base to propel it higher. The selloff today is also on heavy volume. I was already slightly down on the position before today, so I sold out of the rest. Remember: Winners add winners, losers average losers. With the way the market is showing signs of life today, I have zero patience for positions in the red.
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My two new longs, $HMIN and $NOG, are looking good. I featured $HMIN on Sunday night as one of my top setups for this week. $NOG is a name that I have had my eye on for a while now, but have missed my entries. As the daily chart shows below, the stock made a double bottom and has since formed a fairly tight base, not unlike $BZ before it broke out.
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I made two trades:
All trades are timestamped inside The PPT.
UPDATE: I bought a 1/2 position in $NOG.
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TOTAL PORTFOLIO:
EQUITIES: 58%
OTHER INSTRUMENTS: 8%
CASH: 34%
Comments »[youtube:http://www.youtube.com/watch?v=5qz94yveXgQ&feature=related 450 300] ___________
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%
OTHER INSTRUMENTS: 8%
CASH: 40%
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