Thursday Update

I’m unable to embed the video but checkout Ashraf Laidi’s afternoon message on currencies, SPX and gold.  Levels in SPX to watch $1080 and **if** broken, then $1020.  A good 7min. to spend today.

Trading In Timeframes

Nasdaq futures on a 1min timeframe today we were forming a triangle and I would go long above or below that breakout.  Longer term timeframe of 60min. we are forming a wedge so my trade would be limited by that wedge; unless broken.

Focus on Construction

The market is at a sensitive area here this morning as traders in the US want to go higher eyeing the full 50% retracement in SPX @ $1123ish however I believe they’re looking for some form of catalyst; an excuse if you will to stampede over the Bears and this mornings economic releases may give them that fuel.  ISM Manufacturing, Construction Spending and Pending Home Sales are all released @ 10:00 EST.   After all, there’s news of improving conditions in Australia and China but the US wants to hear of improvement here.  Improvement sufficient to justify a higher valuation that the current.  For further information on these releases CLICK HERE

The State of the Market

Life intervened with a plethora of doctor appointments this week for my son however, heading into the weekend, my focus is to take a step back at the markets movement this week and what are we in for next week.  My first stop was this interview with Ashraf Laidi, Chief Economic Strategist @ CMC Capital Markets as he speaks on the state of crude oil, gold [will it ever come down?], the US Dollar and the our dependence on China.  I will post more as the weekend transpires as on the home front, we will begin the long, arduous task of decorating for the impending holiday season.  Never an easy task

A quick way [for me] to gain perspective of a ticker, or at times, the overall market is to view a chart without the price viewing only the moving averages and perhaps a Bollinger Band.  In this chart of GS, the first things jumping out to me beside the MACD cross is not only the 21d EMA cross below the 50d SMA, but how perilously close the 50d is to going above the upper BB; a definite sign of weakness in my book.  It’s not quite there…..but it’s damn close.  Lastly, look closely at the ends of the BB.  Both are now pointed down………

Personal observations and comments this week which left an impression:

1. Russell index fell first as investors took profits on their riskier positions; small caps
2. Financials fell next; again the riskier of their portfolio
3. Who’s next?  Energy?  If so, what % of the S&P does crude represent and can the S&P go higher without it and the others above?
4. The DOW is outperforming here as large caps are outperforming their riskier peers.

FOMC Minutes

http://www.federalreserve.gov/newsevents/press/monetary/20091104a.htm

Monday Notes

As posted here numerous times, the Bears finally caved in unable to get below the 100d EMA and what a beautiful short squeeze this a.m. with SOHU up over 6%.  *Some people* in social media really should go back to drawing their own charts and stop relying on Profit.  Took some off @ $69.11 moved up the stop to LoD based on my overall belief we’re in for a market pullback.

Unfortunately have to leave for yet another Doctor appt so that being said, I began scaling back into a ES_F short @ $1093.50 and believe it or not, shorted more CAT $57.11.   Have an order to short X @ $43.41 w/stop above resistance.  Placed trailing stops on BUCY and ORLY.  No action in DRV at this point.  Watch DJUSRE

So How Have The Sectors Fared?

I thought I would post this [courtesy of Bespoke Investments] so that I could take a step back and see what sectors have gained the most, and which have not, since Lehman Brothers was allowed to fail. 

Now Telecom & Utilities are *safe haven* sectors so I would expect them to underperform as long as SPX is streaming higher.   Energy, industrial & materials are where they are because of lower overseas (export) & consumer demand.  You get the idea.  Instead of worrying about when or if the market is going to go higher or pullback – I’m concentrating on this.  What areas should I be investigating to get in next or increase my exposure.  Just a thought for you

The GAP!! Watch the GAP!!!

Jon Najarian was kind enough to post this today so of course, I promptly swiped it.  Originally courtesy of Bespoke Invesestments Inc., it demonstrates that over the last 12 months (since the big fall) only two days did the SPX trade between 1038 and 1100.  What that means is we’re going to be in *no mans land*.  A desert with no water and no major support or resistance.  Anyone can win; Bulls or Bears.   Several traders on StockTwits believe if we pull back, it’ll begin in this area and they’ve begun hedging with small positions in inverse ETFs and options plays. 

Now if you check your stocks, you’ll probably see that many of them have the same problem.  A huge gap.  I can guarantee you, at 1100 there’ll be a ton of shorts as that’s what happens with gaps.  Shorts take up the bottom of a gap down as their line of last resistance; Custers last stand.  To get beyond that will be interesting.  Lots of churning and sideways action to take the shares out but eventually it will be done.  In the meantime, check your stocks for this gap area.  It’s going to be a fun ride to 1100.

Yep, up in smoke

Image by Getty Images via Daylife

Well, my gamble didn’t pay off in SMN and I lost .25 cents.  No biggie.  Actually if I were a day trader, I could’ve logged gains at the open but in sticking to my trading plan, I waited for a price target – which never came about.  AUD/USD made a come back when big money began trading after 9am and SMN took a nosedive.  More proof positive to wait for the move – THEN get in a trade.

Ah, What The Hell. It’s Only Money