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Abigail Doolittle
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Abigail F. Doolittle is the founder of Peak Theories Research LLC, which is an on-line research firm dedicated to providing investors with a technically-inclined view on the financial markets and the economy. The firm’s research begins with the analysis of charts and then ties in various... More
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  • Sell Equities - Sit On the Sidelines in Cash 1 comment
    May 27, 2010 5:57 AM | about stocks: GLD, SDS, SKF

    The Ole’ Sucker Punch
    I’m speaking for myself, of course, but that was what yesterday felt like on some level.  The market trades in a restored manner for most of the day with a decent uptrend despite some unevenness, and yet the whole day, I’m waiting for it to reverse as so many other recent trading days have done both up and down.  And then, when it does actually reverse, I, yes, me, I’m actually in a slight, probably feigned, state of surprise.  Where did that come from? 


    “Stocks and Commodities Up On Renewed Economic Hopes, Euro Down”

    That’s where it came from.  When I actually read a headline along those lines yesterday morning, my head dropped to the side.  Did the author intend the paradox or was it simply a casual recap of the way things were at that moment?

    We’ll never know but so long as investors and traders are grappling with whether the Euro is a viable currency, a currency that not so long ago was a serious contender to become the next reserve currency to the global financial system, and the EU a viable political and economic union, stocks are not going to go up and stay up.   


    Ugly, Uglier, and Uglier Yet

    The fact that you can’t buy a 1-month, 3-month, or 3-year snapshot of the S&P 500 at this time is worth noting.

    (Please visit www.peaktheories.com for all charts.)


    Even the Bear Flag Is Afraid of this Market
    Look at it droop. Perhaps it’s starting to feel the weight of its technical target of about 965.

    (Please visit www.peaktheories.com for all charts.)


    This Is Not a Buying Opportunity
    Do not go long equities here.  Sell stocks here.  Should all of the world’s uncertainty disappear and the market move with upward momentum through its 200-day moving, buy back then.  Until then, and I tend to believe there could be a good bit of time between now and “then”, sit on the sidelines in cash.  
     

    Portfolio
    Well, this doesn’t change very much.  I remain mainly in cash with a small position in GLD and a few small short positions.  I’ve started adding to one of the latter or SDS and will add more once it’s between $38 and $40.  This thing chunks up and down though so it’s more likely to be above $40.  I may add to SKF at about $26, but there’s little, very little to like about that chart even though I think it will gap up in sympathy if the European banking system begins to crack more severely.  I will add to GLD at $121 through $124.  Simple, I know, but safe. 

    As always, thank you for taking the time to catch up on my thinking.

     



    Disclosure: Long GLD, SDS, SKF
    Themes: Bear Flag, Selling Opportunity Stocks: GLD, SDS, SKF
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  • Bron
    , contributor
    Comments (140) | Send Message
     
    I have a somewhat similar view. But I'm only looking for 700 on the downside (so far, anyway). I also have a small gold position (DGP), but will increase it over time (though I'm mostly a trader, so I jump in and out a lot). I do have some stocks, still, as I'm expecting a rally here, but I will be selling into that and then taking another look at things afterward. (I do still have some SDS in case I'm wrong about the rally.) My assumption now is that we're headed lower eventually, but I think we could continue to bounce around and rally into July and August, possibly. In any case, I'll just take what comes and do my best to trade it.

     

    I moved into cash back in late March-April, but then jumped back in to play some good stocks, play the crash, and try to profit from all this volatility (e.g. buying/selling SSO/SDS at the extremes of the swings). I expect a full fledged 'go short' signal from my TA before too long and then I will concentrate on shorting into rallies and not taking too many long positions. Because I think we could see some fierce rallies on the way down, I will continue to play both sides. Should be very interesting.

     

    I look forward to reading more of your site content as time permits.

     

    Good luck!
    28 May 2010, 12:12 AM Reply Like
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