With the futures cratering and jittery emotion in the air, the bears have to be saying this:
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[youtube:http://www.youtube.com/watch?v=nMCaHxZuf94 550 412] Comments »Yearly Archives: 2011
Another Big Test
I noted last evening that this week would be crucial for the bull case. In the understatement of the year, the bulls are off to a weak start. That said, looking at the weekly chart of the XLE (ETF for energy stocks), indicates that an important test is upon us. The $62/$63 level has served as either clear support or resistance over the past several years.
I recognize that the market has recently sliced through what should have been key reference points as though they were not present. While many would say that technical analysis is not working here, I would argue that it is, insofar as the market is telling us that selling pressure is so overwhelming that buyers are too weak to defend prior areas of support. Thus, it follows that if the swoon continues through this $62/$63 area in energy, then we know just how bad things really are. The fact that this area is so well-defined makes it all the better of a litmus test.
Again, these are reference points only, where they serve as an excellent gauge of underlying strength, or lack thereof. These are not places to automatically stick in your bid and buy.
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Two-Part Stock #Market Recap 08/08/11 {Videos}
Hey Bears, Keep it Classy
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Great job, truly, if you have been short this tape. That said, at this point the only way you would stay short here and not cover is if you are playing for a bonafide. While that may be on the table, so is a massive, up 5% day as a snapback. Well played, but stay classy.
Comments »Sharks Everywhere You Look
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This market is like that Super Mario Brothers video game you’d play as a kid. Until you could beat the game, you keep pressing the “Restart” button and try it all over. Each day that it looks like we may see capitulation, it turns out to be a fugazi, and we start all over the next one. The bulls have been completely futile in putting together a bounce for more than a few hours (if that) over the past two weeks.
We are now historically oversold by many metrics, and the rubber band is stretched to the point where a crash is on the table, but so is an up 1,000 point day on the Dow. If you have the risk tolerance for it, you can trade accordingly. Otherwise, full cash is a position, as RaginCajun and I have been in for swing trades since last Thursday inside 12631 in The PPT.
The sharks are out in full force, looking to take a bite out of you at each chance. Tread carefully.
Comments »I Know, I Know
We have seen plenty of potential reversal setups fail over the past two weeks, to state the obvious. That said, the moment you start ignoring these things is usually when they actually start working. At the very least, keep an eye on the falling wedge dating back to this morning on the Russell 2000 small cap-led index (intraday chart below). After a steep prior downtrend, a chart that settles into a falling wedge is actually indicating that the selling has somewhat abated. The presumption is that it will resolve to the upside as reversal pattern. Not a guarantee, by any stretch, as we know by know with all of these failed bottoms.
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