Monday, September 28, 2009

Yom Kippured

I forgot Yom Kippur was today. I read it mid last week and than forgot about that over the weekend. I think I read that the market has been up the last 17 of 20 years on the Yom Kippur holiday. Every time we get close to a breakdown we get a holiday where all of Wall St leaves and the market gets jammed higher shifting the technicals and hence shifting the momentum traders who have ruled this market for months. It happened around the 4th of July, it happened on labor day, and it happened today. We didn't even clear a billion shares on the NYSE. The S&P future didn't clear 1.6 million. It was a ghost town and you combine a day when the market was going up anyway with no volume, chatting computers, and you get an explosion to the upside on no news.

The exact same thing happened on the short labor day trading day. Pull up a chart of the S&P 500. We closed around 1004 on Thursday September 3rd. The key level then was 1015. It looked like we were breaking down. Short holiday trading day on Friday the 4th with no one around and the market gaps up and closes around 1018. Three points above critcal resistance at 1015. What happened today? We have key resistance at 1060. Move strongly up and Wall St makes sure we close at 1062.98. 3 points above resistance.

The break above 1060 was weak also. It wasn't a real break, it just sat there all day once the market got it above it. Either way this takes alot of the momentum away from the bears. Doesn't matter if there was no volume. It changes the momentum indicators when all the traders come back. So the bears will have to reprove they are in control which will be difficult. You could make a case there is some resistance at 1065 but there isn't much.

The German elections ended up being a bigger deal than I thought also. Germany moonshot. I was expecting that would be bullish for Europe but not to the extent it was. The same thing happened after the Japaneese elections. Japan was up around 2 to 3% the day after the election. A month later they down like 5 to 7%. German elections are only a trading event and longer term now that is past I see it as actually a bearish catalyst.

So what to look for from here? Tough to say. Bears have to come back quickly tomorrow or we will not be pushing dramitcally lower any time soon. The only way that happens is if the Case Schiller news surprises to the downside and that is not something I am willing to bet on. This week job related data does not bode well for a sell off because as I said yesterday the job news can be taken anyway the market wants to take it. If the momentum in the market is up, the job news can be kindle for the fire because it will be viewed as improvement.

Being discplined I took about 1/3 of my short exposure off I added in my trading account. I'll take some more off tomorrow if we continue higher.

Since your talking about a probability world the probability has shifted back to 50 to 50 on what the next move will be. (might even favor the bulls)

None of this changes the fundamentals. It can change where we will be in a week or two from now. We will see if we get a September 8th repeat on September 29th. One thing going for the bears was the market did this completely without the dollar today. That won't last. Either the dollar will start going down or the markets won't be doing an early September repeat.

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