I had every intention of getting long today. I did not really consider that the Nasdaq and Dow might be up over 70 and 200 points by the close. It seemed to me that after Thursday, we would be up, but not this drunken teenager rally. I waited all morning for a dip. The indexes kept making higher highs, and higher lows. After lunch, I gave up trying to buy, deciding the rally was overdone, and went out and played baseball with my son. When we came back in before the close, I was watching what I believe to be distribution. So instead of getting long, I actually sold short [[LEH]] and nibbled on a little [[SKF]]. I did haveÂ a limit order that filled for a small amount of [[MBRK]]. I’m also short the ag name, [[CNH]].
Plainly, I’m not buying after two big rally days in a row. Instead, I’d rather haveÂ a few shorts grillin’, while I wait on a pullback.
My plan has been for months to buy the indexes after a successful test of the 50 day average. With the Dow, Nasdaq, and S&P all above the average, I have a strong feeling that the test will come, shortly.
The Retail Holders….[[RTH]] This looks like a nice short setup. I can’t imagine that this move has been anything beyond short covering.
As for the Homebuilders, [[XHB]] it looks like money (whether itÂ was dumb or smart remains to be seen) sold into the strength today. Watch the 200 day average, just like in the Retail Holders, to guide short sales.
All in all, it appears the Bulls have stampeded for the clitoris, bypassing all that is good and holy, in their rush for satisfaction. I’m concerned the party will be over before it really gets started. Therefore, it looks like a pullback will be in order. Let’s see if the indexes can hold the 50 day average.