I really wanted to be in cash at the close of yesterday’s trading, but my signal didn’t tell me to move to cash. I was looking over some charts and realized that it’s really pointless because today, Friday, the market is going to be news driven and emotions are going to rule the day. My signal is an end of day signal, and currently there are some mixed signals so I haven’t added or trimmed any of my positions this week. My shorter term time frame is bullish, while my longer term has remained bearish. Even if the market gaps up today, there’s no point in me watching and letting my emotions tempt me into covering my shorts because my signal won’t come till the end of the day. This is where getting away from the computer can help you to keep your emotions in check.
When big macro news is set to be announced it has the same effect on the markets as earnings do on individual stocks. And I never hold a stock through a earnings report. It’s just about the same as gambling and gap up/downs don’t provide you with much flexibility. The major markets are slightly different because they don’t move as much as individual stocks do, but just for the record I don’t like to hold through the jobs numbers or Fed announcements.
With the Nasdaq putting two solid days in the books, even with a stellar report and a gap up, I can’t really imagine the market holding onto it’s gains. Best case scenario for the bears is a gap up then reversal. Worse case is a gap up, pause, and strong rally into the close. Should the latter happen, I’m inclined to become bullish as my signal will almost certainly trigger to go long.
Good signs for the bears:
- Dow/SPX is still under it’s 200 ma
- Volume on up days has been very low on most of the major indexes
- Financials (NYSEARCA:XLF) are in bad shape and remain below it’s 200ma
Few stocks I’m watching on the long side:
- VMware (NYSE:VMW), Apple (NASDAQ:AAPL), Coinstar (NASDAQ:CSTR), Aruba Networks (NASDAQ:ARUN), Caribou Coffee (NASDAQ:CBOU), Thoratec (NASDAQ:THOR), OmniVsion Technologies (NASDAQ:OVTI)
- In gold sector: AngloGold Ahanti (AUO, Compania de Minas Buenaventura (NYSE:BVN), Gold Fields (NYSE:GFI), Rangold Resources (NASDAQ:GOLD), Goldcorp (NYSE:GG)
- Dollar: PowerShares DB USD Bull ETF (NYSEARCA:UUP)