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11/01/2010 - It's only the kickoff

 ***Charts are posted on tumblr blog***

General
  • The market is in need of a correction. With each day it is put off due to Fed intervention or people hopping on the bull train, the correction will be that much sharper and go that much further. I opened some new shorts today, and will do so again tomorrow possibly. The only problem with this market environment is elections(TUES night) and the QE2 announcement(WED). I don’t think I want to maintain full short positions headed into those events, as the elections will probably be positive (Rep. taking control of house, which is almost a certainty, and a close race in senate, 50-50 results in Dem win) and QE2 will probably come in the form of a low # ($200billion maybe) with ‘more if needed later’. If tomorrow is a significant sell-off, I will cover part of my shorts and re-initiate after QE2… 
  • A bizarre side-note, the future prediction software ‘Web bot’ has warned that Nov 8-11,2010 will be a big “tipping point”, and a potential stock market crash. That’s fine with me as I am short looking to get more short. 

Macro:

  • As today is the first day of November, its a good time to step back from the trees and take a look at the forest. The SPX is overbought and held up by government/fed money until the elections are over, which hasn’t helped the Democrats much anyways. The last 5 days in the SPX have had decreasing volume, and the market has to sell off. Whether it trades a day or 2 higher, maybe hitting 1200 is irrelevant. I will just add to my short if that happens. XLK is at the +2 standard deviation (1 year), and the last 7 days have been on low volume. COF is now below all moving averages except the 377dMA.
  • The market is going to have to correct; technicals, fundamentals, and web bot all confirm it

Opened Positions:

  • Short XLK - @ +2vb(1yr), o/b, rsi5div, rsi2 @ 99.22, shooting star bar today so far (14:10est) also an RST, NEEDS A CORRECTION, and I’m happy to ride along in that. 
  • added to short of COF

Closed Positions:

  • EWG (+0.17% this month) , I am expecting a DXY rally which would hurt this position 

Future trades:

  • Japan is still the weakest market out of Asia, yesterday every asian market was up except Japan. I may get short EWJ soon


Disclosure: Short COF, Long SH, Short XLK