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Supreme Alpha
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I am an independent trader/investor. I like to look for opportunities to long and short equities with specific focus on companies that have gone public within the last four years.
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  • Buying opportunity on today's pullback 3 comments
    Aug 4, 2011 7:15 PM | about stocks: SPY
    Today the market dropped another 4.68%.  I know many of you are scared that this is the beginning of more selling.  I beg to differ.  Today looks very much like a capitulation day.  The last time volume was this high on the SPY was 3/16/11 where 469 million shares traded hands.  Today, the volume was 485 million shares tradded.  The range was also unusually high.  The last time this happened, SPY rallied from 126 to 136 in about 2 months.  Based on the action today, I expect to see a rally perhaps back to 134 level from here.  I do think the market is oversold and the fundamentals are not as bad as market would make you think.  The Euro crisis is adding more uncertainty to the markets but I do think this will work itself out. Bottom line is this, take today's big sale as opportunities to add to your positions.

    Despite all the doom and gloom and folks having you believe that we are in for another recession, I really don't believe this scenario will play out.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Themes: macro Stocks: SPY
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Comments (3)
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  • tarenfro
    , contributor
    Comments (2) | Send Message
     
    In support of your position the SPY reached a rare extreme oversold level on the RS. It looks like buy time. I like options but the near term variability would cost a lot.

     

    See the blog below:
    blogs.stockcharts.com/...
    4 Aug 2011, 07:48 PM Reply Like
  • Supreme Alpha
    , contributor
    Comments (20) | Send Message
     
    Author’s reply » You may want to consider selling puts and buy calls on the SPY. For me this time, I will stick with going long on the SPY.
    4 Aug 2011, 11:39 PM Reply Like
  • inquisitivemind7
    , contributor
    Comments (208) | Send Message
     
    Suggesting going long when we are at high risk for recession is a very bad idea. Going long in a highly likely bear market is asking someone to invest with a high likelihood of immediately losing a significant portion of their investment. So what if you buy SPY after a 15% correction if it the market continues to trend down after that? While technicals are great for getting a better value for your trade and is retrospective, fundamentals are prospective and actually drive where the market is going to go next. Go long on bonds e.g.: TLT for now to receive better returns.
    5 Aug 2011, 12:34 AM Reply Like
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