The old bearish flag pole has met a potentially bullish triple bottom. Since August 8th, we have received a deluge of data and news. Still, we remain in the trading range of 1100-1220, and for a reason. Poor unemployment and low wages are not a good combination in a consumer economy. European fiscal fears also resurfaced with news, speeches, and commentary daily. However, corporate earnings are at an all time high. So, until evidence confirming or relieving the recessionary and sovereign debt pressures is brought forth, short at the top of the range, 1220, and buy at the bottom, 1100. I like to play the ups with UPRO, a 3x bullish etf, and the downs with SPXU, a 3x bearish etf.
We receive the widely ignored 20 city Case Shiller index and September’s consumer confidence. I expect both to be in line with expectations: abysmal, but not deadly. What I’m particularly watching is the Greek vote, better explained here. I think they will pass it, and the market will continue to rally, but expect an early dip due to overbought conditions. This point, if consumer confidence is acceptable will act as my entry point. I probably will utilize FAS 9/30 $11 calls once we get into the 1155-1160 range, or .75 per contract. I expect to be able to flip them at 2.00 per contract by the end of the day. All together, after the intial dip, I expect a pretty harmonious upward climb, ending the day near the highs.
11/12 Global markets are in bear territory. It would be an anomaly if we don’t join, just not exactly sure what will be the straw the breaks the camel’s back. VIX is high, meaning trades have to be evaluated more often, daily in my opinion. I see a small rally: 1160-1210, followed by a big drop: leaving us in the 940-1060 range. Be nimble.
Always bet on the USA.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SPXU, UPRO, FAS over the next 72 hours.