This market is whack. As for today, technical analysis suggested the downward trend, initiated 215 on Tuesday, still was in tack and confirmed by the bearish downward channel formed early and verified by 1015. Pull up the 5 day SP 500 chart. If you notice from monday 0930 to tuesday 1415, the lows were always higher. Also, on my trading platform, the bids for SPY were higher relative to the Index's present value, bullish in my mind. At 1415 tuesday til thursday 1415, the lows were always lower, and the SPY bids lower than the actual SPX index, bearish in my mind. Therefore, after the initial spike, as the rally was fading (losing buying interests) I shorted the market via BAC puts and held onto my FAS puts. At 230 today I sold, thinking the trend may have reversed as well. (You can verify im not full of shiz*t by tracking my stock talks). (And, Im learning to harness in my greed: very important IMO)
Day Trading Account: 100% cash beside YHOO calls
There is a deluge of data abroad that will provide market direction, check it: http://online.wsj.com/mdc/public/page/2_3063-globalEconomicCalendar.html . I will synthesize foreign #'s with US data of PCE prices - core, chicago pmi, and michigan sentiment, in order of importance. If the data suggest inflation/growth aka higher equity and stock prices, I will dive head in long via UPRO. If data suggest deflation or further hints at a slowing (recession), I might short. I really don't like shorting so mid range, unless I view the market as disillusioned. Stock markets have bullish biases! PS, the range is 1100-1220. If we are 1160, we are dead even in the range. PPS, use SPXU to short. Want to execute 1 trade that spans 10-15 points in the SP 500.
If I had to guess how it played out
A repeat of tuesday. Probably will have a muddled beginning due to a barrage of data converging with semi overbought conditions and slight hesitance(due to today's bipolarity). Then we rally, peaking in mid afternoon, which will be followed by a, do I really want to hold into the weekend selloff. Too much data to truly speculate though. If we get bad data across the board, look out below, 1140-1120).
We could rally to year end and get to 1350 SP 500 if debt/recession/growth fears are allievated. It would be a pretty harmonious climb. We can also fall hard, to 1000 and below, quickly, and bearishly channel down to 2009 lows and lower if worse fears confirmed.
For the mid term, Its only wise to look at current trading ranges +/- 1. We are rangebound for reason. We can break up to next range if we can drift towards the top end of the range ( data comes in ok) then blast forward with great earnings. We could break down if we drift lower (via no solutions) to say 1120 by next week, and the jobs numbers or euro debt kills us, confirming R & D fears (recession and deflation).
I am looking to go long with force, if we hold 1100-1120 again. I will be looking to go all in short if we break through 1100. Otherwise, I will continue to nibble, monitor the macro picture, abide by techinical trends, and abuse the current trading range. If we break to upside, I will also go long.
I initiated positions in IAU ( gold) and XIV ( inverse volatility fund) in my IRA with the belief both are near bottoms, and I can hold for 2-3 years and realize a total 200% return. VIX will return to historical avg of 20. Gold target is 2900. To get back our swagger, governments will print tons of money, not only debasing currency so it takes more paper to buy gold, but increase demand through loss of faith in gov. For equities: Looking at TTM, MSFT, TOT, and VZ to complete my portfolio. Still waiting for a better entry point for the dividend/value/growth beasts.
PS, I am overly bullish on YHOO. I am attempting to acquire 500-1000 future calls in the event of a buyout. Too risky to suggest, but believe their stock is of great value at its current price.