Thursday, April 23, 2009

Getting Nervous, but still short

While we broke yesterday's low this morning, the bulls were willing and ready to take this market higher. So, while I'm still 100% short (and even added to some of my position at the close), I will be exiting my positions if we get above last Friday's high, and will likely add hedges with a move above yesterday's high. I believe if that were to happen, we could have a massive short squeeze, and I would rather not participate.

The key to the bear case remains Monday's low. Without a close below it, the market will continue to have an upwards bias. Seeing that tomorrow is Friday, we'll see if the bulls are willing to take their longs home over the weekend or if they take this opportunity to cash out.

I don't see any significant divergences that would give me any real confidence of a gap down tomorrow, but we didn't get any at today's low either, so we'll have to watch and see what the market gives us. A break of SPX 840 would give me a lot more confidence that this market is headed for a decent size correction.


  1. Any updates intra-day we need to breach 875 for you to completely change ur mind or?

    Thanks for a very informative blog....

  2. iv, I've been stopped out and re-entered several times already and been stopped out. I still have my puts that I will hold until it is obvious we are going up. I haven't been impressed with volume, but at the same time the market continues higher. I'll continue to watch and see if we get a downside entry, otherwise I may just wait and see until next week.

  3. Tim G marches on with his BS. The financials and earnings are key...all wave counts are off the table until the financials roll over in my opinion. Looks like we are heading for the 200 mva

  4. Rich..wondering if you could shed some light on possible "Program Trading" that may be taking place in the market. Did you notice the trades on Wells Fargo today..check out a 5 minute chart with volume late in the day. And how can the market fall so hard down to 55 pts on the DOW and then scream up to 150 pts.

  5. kidflare - certainly there is program trading that impacts market direction. You'll find it most active the first hour of the market and the last hour. However, I firmly believe that there are really big players (i.e. GS) that are working with the gov't to move the market in a certain direction for short periods of time to meet political/financial objectives that may or may not be clear to us at the time. These guys hold massive positions and can have money added to their positions at the whim of the Fed. However, I do not believe they have any ability to control the long term direction of the market. In the end, the trend is like mother nature, there will be no thwarting it.