SP500

Rally Time

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I shorted more VXX today via puts in the belief that we are about to see a bullish rally in the market perhaps into the end of August.  Makes sense to see some end of quarter window dressing to try to salvage some mutual fund performance scorecards.  I have to say I am quite surprised … Read more

sp500 Bounce did not Work

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This market is too tough to call right now.  The bounce did not work and the VXX break down did not work.  I have to describe today as bearish but cannot conclude that the market will blast higher or lower from here.  But the bias seems to be more weakness. If we truly are in … Read more

Some Type of Low is In

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I think we have a bottom for now.  I am seeing volume reversal signals on VXX and the SPY.  We hit a volume blow out yesterday and we should head higher from here or at least bounce a bit. Fear turns into greed very quickly. There will eventually be another huge shorting opportunity down the … Read more

Volume Suggesting Crash Not Done Yet

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The volumes Mid day on the QQQ and SPY are suggesting to me that we have not climaxed yet on the crash that is currently underway.  The candlestick we had last Friday was a doji candlestick.  It was failed to be confirmed today as a reversal signal and therefore I have to conclude that we … Read more

Sp500 in Full TILT Crash Mode

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The sp500 today was not able to bounce as I thought it would.  Instead the market chose to take the full crash mode option.  There is not other way to describe this type of move.  This is an all out crash and it has similarities to the 1987 style crash. We are about 10% down … Read more

SPY Bottomed Today

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Today the SPY ETF Bottomed with a bullish spring formation in relation to the 3/16/2011 price swing low.  It was a bullish spring and rejection of that 3/16 low and volume shrunk by about 21%. 

So it is clear to me that we have bottomed in the short term and are now set to work higher in some type of counter trend rally higher.  This may end up being a low volume rally higher relative to the recent heavy volume decline and would set up a possible ideal re shorting opportunity in mid to late August 2011.

It is quite clear to me that the next big decisive move in the market will occur in the late August to early September 2011 time frame.

Counter trend rallies can sometimes extend a lot higher than at first thought.  I am thinking the SPY could get to the 130 to 131 range with an outside possibility of 132.5 as the most optimistic scenario.  The weakest bounce scenario would be about 128.5.

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Sell the Rumor and Buy the News

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You have probably heard the expression ‘Buy the rumor and sell the news’  ?  Well that strategy works very well when you are looking to go long a particular stock on some forward looking news.

The opposite of buy the rumor sell is the news, is ‘Sell the rumor and buy the news’.  This is exactly what I think is going on right now.  Traders have already begun selling the upcoming news next week (shorting it) and when the news arrives (whether it is debt news, or Fed QE3 news, or maybe something else) they will very likely buy to cover and close shorts right on neckline support.

Meanwhile major news networks are providing us with great informative updates about how the market will crash and it will be Armageddon next week.  I think even MSNBC showed a price chart of the DJIA a day ago showing how it declined.  All of them are talking about the stock market and how it will fall apart.  To give them some credit, they have been right about the decline leading up to the news.

So I currently recommend closing all shorts near the 1265 to 1270 sp500 range or the DJIA 12000 range.  I believe this support will hold and the market will bounce from there.  Of course that is not guaranteed.  Will have to see how the market reactions on neckline support and then take cues from there.  But I suspect we will see a mini capitulation near these levels.  We may dip under these levels briefly but I suspect it would only be for a very short time frame.

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