21
NO REASON TO BE BUYING
richard
blog
Hello Hedgers, it’s been a while since I made a post about the markets but here it is. The past week has been a bit uneventful, after triggering on the head and shoulders pattern I was expecting the S&P500 to test the 200 day moving average right away. Instead, it took a little break at 1420 before trying to test the MA (200) again. I sat on the sidelines at 1420 while keeping a close eye on the S&P as we approached the vital MA (200). Things were looking very bullish last week, but as predicted the market would not be able to break this 1440 mark. We got confirmation on Tuesday as the sellers decided to show up. Today, more damage was done on the markets as more sellers continued to flow in (today’s volume was pretty strong). On top of that, we broke the March trendline…a very bearish sign.
I have been shorting the Nasdaq (buying QID) since hitting the MA (200) in the S&P; however, this may be a wrong move. I should’ve shorted the S&P (buying SDS) seeing as the Nasdaq still looks fairly strong when compared to the other indices. The Dow is also showing weakness as it fell below its trendline after forming a bearish double top pattern on Monday. The S&P, Dow and Russell are all in bad shape, as of today there is no reason to buy. In the short-term, or at least this week, things are looking bearish. We are making lower highs and lower lows…unless we can retest the 1440 mark soon, I believe the markets are heading down from here. Don’t listen to the people on TV who say that the markets are still looking extremely strong. They were!…but that was last week!! As mentioned in my previous articles, this summer may look ugly. I am expecting a lot of blood…
Strategy: Stay on the sidelines, short the indices or day trade.
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Richard
richard[at]hedgeagainstspeculation.com
May 22nd, 2008 at 8:15 am
You got this one right…summer will be ugly but that probably won’t be the end. One thing I really agree with you on is to ignore the clowns on TV. The so called ‘experts’ that a re regular guests on the business news channels have less knowledge about the markets than an Iraqi goat farmer has about thermo-nuclear reactions (no offense to the goat farmer). Those who really watch any of those channels and really think they get any valuable information should not wonder why their portfolios underperform on a constant base.
May 22nd, 2008 at 8:48 am
Hm, I’m a bit surprised that we’re up this morning but I think we’ll pull back by noon. As long as the S&P stays below 1410, the trendline will act as resistance.
May 22nd, 2008 at 8:52 am
Oh and Apollo, thank you for your regular comments. I often wonder whether these TV analysts get paid to say what they say, I wouldn’t be surprised if companies paid these analysts for sponsored reviews…but then again, some analysts are alright.
May 22nd, 2008 at 8:15 pm
We broke some important support levels, and are now back to the support we were at before the last little move up. I dont see this as a very good sign, because we are no longer make higher lows to match the higher highs. Friday may run pretty similar to today, but well see. Weird thing is, my long positions, i moved the stops real tight, and none of them broke this week. GNA, PLLL, CXO, AMD, FCEL, all held above my stops, though AMD came close to stopping out. Well see how they pan out.
May 22nd, 2008 at 10:54 pm
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May 23rd, 2008 at 2:06 am
Hi Richard, I don’t know if some companies pay analysts to say certain things but the main problem with analysts is that they just have no knowledge about the subject. They think they know what they are talking about but in real life they are just a worthless piece of the markets (especially those employed by Mutual Funds, you would be better off to have a sub-intelligent primate giving you his opinion on equities). Analyst ratings are as irrelevant as the ratings by all the ratings agencies. The source from where the opinion is generated is just an unsophisticated piece of feces. 99.8% of the entire professional market would be better off to seek other opportunities.
May 23rd, 2008 at 3:50 am
so the beginning of this short term correction could start today. (We’ll see)
May 23rd, 2008 at 6:04 am
1390 in the S&P is the key. If it holds Im staying neutral to bullish, if it breaks, then the market may have a move similar to how the year started. Take a look at the weekly chart of any major index to see what i mean. Looks like a pullback within a larger move on those charts.
May 23rd, 2008 at 8:07 am
We broke 1390, now what really matters is whether or not it stays below this level. So dont get your panties all up in a bunch just yet. BTW, stopped out of AMD with only a 14% gain. And thats just one of the five stocks i currently own, all of which are in the green with stops that will give me at least 10% profit on all but one stock. PLLL my stop will have me breaking even, but i like the pattern the stock is currently in. Watching for a break in the ascending triangle.
May 23rd, 2008 at 10:23 am
closed out of PLLL at break even, the stock tanked soon after.
Closed out of CXO with a 23% profit. Closed out of SINO with a 40% profit in two days. HAHA. Still in FCEL but well see what i decide to do with that later. As of right now, i am mostly out of the market. Im gonna be spending most of the afternoon looking at possible bearish trades that i can put on early next week.
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