mirkotoscano's  Instablog

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CFA member. In this blog I put my thoughts. Work in an Italian bank in a strategist position (forex and commodities), but my true passion is the stock market.
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Mirko Toscano - market view and trading signals
  • IT WAS A DEAD CAT 0 comments
    Jun 3, 2012 3:08 AM | about stocks: SPY, SOXX, DFS, VXX

    In the last post the question was if rebound was the begin of a new up-leg or a dead cat bounce. I told that volumes weren't impressive and a FTD (Follow through day) was necessary for a new leg.

    FTD never materialize and indexes plumged on Friday after disappointing job report. it was a dead cat.

    It's time to stay aside for new bullish position but be careful with short because we could have a choppy market such as last summer

    Sox index still has downside space before reaching support. It usually tends to lead major indexes such as S&P500, Nasdaq, etc therefore a significant new bull leg doesn't' seem close.

    Of course these are period of high turbulence and a world central bank cooperation move is always a possibility and this would change the scenario (think that QE3 is coming on June 20)

    But so far the best thing is stay aside for intermediate trades or focus on daily trading.

    Maybe is also not the time to implement a short position with time horizon longer that days, because of a possible Fed/ECB announcement in June.

    About S&P500 it's at important support levels defined by SMA 250 and 200, while EMA 200 is already above.

    (click to enlarge)S&P500

    Personally I still have the small directional position on DFS that fell strongly last Friday. The option is expiring on October, let's hope Fed launched QE3 for that period and stocks resumed the uptrend for some weeks (the last one likely). As i told this is a small position without stop loss with a target of at least 100% o premium paid.

    Have still the put sold on SLV at @30 with July expiration (am just below breakeven now) and a bull spread position on VXX as hedge.

    Wasn't able to open a put spread because Friday move was stronger than I thought and I didn't catch the price.

    But basically the 90% of trading is cash and i use it for very short term trades.

    For intermediate long position now I'm going to wait for the first reaction day and a FTD appear. It won't happen before 1 week in best case.

    Stocks: SPY, SOXX, DFS, VXX
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