Tuesday, September 1, 2009

Growl of the Bear

The knockdown the bears experienced yesterday, they got back up delivered their own blow while taking a pound of flesh in the process. It is never the news, it is the reaction to the news and the reaction to the news started weakening last week. This week, the gates opened.

I have been repeatedly pointing to the 1015 level as very very important. We bounced off it numerous times yesterday. Tried to hold it today and then once we broke it, it was a race down. Breaking that increases the probabilities substantially that the August/September top that I have been looking for and talking about for months is finally in. We need to get below 970ish for me to firmly declare a top but the probability is looking really high. A move back above 1015 invalidates it all. We need to hold it. I would not be surprised if we get some sort of challenge in the days ahead.

If you lifted the hood on the market today and peered in, it was incredible. Over 3 million S&P 500 future contracts traded today. I haven't seen that outside of an option expiration day since March. Over 1.7 billion shares traded on the NYSE. Financials took it on the chin and even more importantly insurance companies led the way down. Dollar rallied and copper had a big reversal. Credit sold off and government bonds were bought. VIX spiraled higher. It was a complete bear day in every sense of the word.

If we have indeed topped, we aren't going straight down. As I have said before, I think last week and this week shows the peek of economic data. This seems to be what the market is telling you now also but there will be good data in the weeks ahead. In the short term between 970 and 1015 is chock full of technical junk. It could get ugly over the next few days / weeks. We need to hold 1015. That is a given. The next support level on the downside is 992 area though the 970 area as mentioned is the really big area.

If the market really does have a serious correction, my job will actually turn closer to normal where I can read a 10k with the idea that it may be something I actually want to invest in.

The news, besides the ISM number, was actually not that great. Pending home sales was very disapointing despite all the headline nonesense. It shows that existing home sales will probable decline month over month now. Not, not good. The cash for clunkers auto sales numbers also had to end up being a disapointment.

I am not ready to go all in short yet (I have alot of losses to recover from current shorts) but it won't be to terrible long where it will be safe to short bounces.


The Duke said...

I can't wait to start reading 10Ks again and actually expect to find something exciting.

On another note, in a moment of pure dumb luck, I played a short yesterday for 6.3%. First trade since March. Felt good...felt really good.

Market Seer said...

Very nice!!!