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Jaimini Desai's  Instablog

Jaimini Desai
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I am an independent trader. I began actively trading in 2008 and my perspective is shaped by the collapse of 2008 and the incredible rally of 2009. My approach consists of seeking out fundamentally strong stocks that are unloved by the market and then assessing general market conditions to... More
  • Update On Market Outlook 0 comments
    Aug 22, 2013 10:20 PM | about stocks: SPY, IWM, QQQ

    I wrote an article describing my growing bearishness in light of recent market action and specifically dangerous divergences in terms of internals. Here is the link to the article: http://seekingalpha.com/article/1634392-s-p500-warning-signs-accumulate-time-to-take-some-profits

    The market has slid a bit but nothing significant, however I think the market is due for a bounce, and I think it is wise to tactically add exposure to this bounce. The internals continue to alarm me and I will keep close watch to see if they confirm the rally or they continue to diverge. Based on this action, I will decide the duration of the trade.

    Based solely on price action, the market seems to be on the verge of another powerful move to new highs, and if the internals do heal, it is certainly possible. Another factor which lingers in my mind is that something like 75% of fund managers are underperforming the S&P 500. A steep drop would bail out all these fund managers from their predicament. A shallow drop and powerful move to new highs would exacerbate their Chinese water torture.

    One healthy change for the market is that commodity stocks and cyclical stocks after lagging for so long are beginning to outperform. Economic data from Europe and China is also confirming this revival. I will be concentrating my efforts in this space.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, IWM, QQQ
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