Wednesday, December 12, 2012

short signal confirmed today; in spite of the FOMC 'rush'; SPY target is 1397

At the close today we had this latest short signal confirmed today;  this in spite of the FOMC 'rush' we experienced mid day.    I think the bulls have finally weakened enough that we'll see some downside action.  I've been sitting on my shorts for far too long.   I can't say I've called this cycle right being so early.  right now I just hope to get out with my shorts still intact.  (pun intended).     I anticipate with this next downward move we'll see at least 1397 on the SPY sometime next week.  

The market breadth oscillator confirmed the bearishness we saw yesterday.      it was also gratifying to see that the stocks > 10dma just touched it's moving average to cross to the downside.    We are anticipating follow thru to the downside again tomorrow and possibly for the next few days.  There is now bearish divergence showing up between the SPY and it's stochastic as well as the stocks > 10dma  (see arrows).    We could possibly get the same downward action we saw in mid september when the FOMC made their last announcement of additional quantitative easing.






Tuesday, December 11, 2012

short signal; but FOMC news is tomorrow

The bull and bear oscillator is giving us a firm short signal with only a half hour to go until the close.  We've seen decreasing volume as the market has continued to melt up.  The stocks > 10dma also has made a cross over to the upside today but it also is showing weakness as we move towards the close.    Right now the decision maker  has to ponder the difficulty of a) does this spike today at the high reflect a possible mean reversion and it is time to go short ? or b) is the market just waiting until tomorrows announcement and we're better to wait for a more clear direction.  

Depending on what kind of trader you are;  if you want to try a short here about 5 minutes before the close would be a good time to take one of the inverse ETF positions.  Another alternative is to wait until tomorrow to see how we open and move throughout the day after the FOMC minutes are produced.  There isn't much risk in waiting right now if you want to be on the more conservative side.  I'm already short enough so will continue to monitor.