Market Thought... conflicted

I stand conflicted. Looking at just the technicals, I can argue complacency and very overbought conditions, hence a needed pullback. Or SP500 to continue to move to 1200 or so.

Looking at the weekly chart, there is clear and relatively recent indications that the weekly 200 and 320 SMA act as support/resistance. If this is the case, then the SP500 has room to run.



Looking at the daily chart, there is a clear sense of complacency. The VIX is at the bottom end of its range.



On the fundamental side, we have a situation where the Fed will start to ease the purchases of MBS', essentially tightening very soon. And a health care bill that will most likely pass. I think the health care bill is a good thing, but Cramer already established a tone that will be negative if the bill passes. So it is hard not to assume a market pull back, however small it maybe, to occur as a worst case scenario.

I am unsure as to how to play it in the short term. (I did roll out my protection to the 120 SPY May Puts equivalent to the current value of my protection).

Trades - SGG and PBR

1. SGG - I entered SGG today, but not for a day-trade. I plan on selling it between 60-62. IMO, it is too oversold, with some really heavy volume.


2. PBR - If your a fan of Fast Money, you would have heard the pounding of the fist for Oil. (Joe T. pushed the USO.) I looked at PBR, and think it can push 50 (probably 53) with bullish oil. In Nov 09 when oil was at the current level, PBR was at 53. With oil rising it should revisit these levels. (I would like to see PBR come in some before hand, but I don't think that will happen.)

Trades - SGG and AAPL

The most frustrating, inefficient method of trading is what I am doing right now. (And I thought I was already just 'getting by' before. Before I was limited in my day-trading capacity, but still very effective and able to make day-trades with out severe issues. Picking away a certain trades. But now, its a 'knife-in-a-machine-gun-fight'.)

For instance:

1. SGG is a buy right here. It could be a day-trade or a short-term trade. But it is very oversold, clearly very negative. (would like to have real-time info for this trade, so I am probably not going to take it. Last time I played SGG it turned out to be a day-trade, then it broke down to its current level)

2. AAPL - have been waiting to add, and now I did. I will continue to add Jan 2011 calls on weakness. (Would have liked real-time info to execute the options trade, but made do with a grossly inefficient options pricing guesstimate as per my Stockcharts and Yahoo's real-time quotes... awesome!)

annoying

My computer got versioned up to Windows XP, and it will not let me upload the most version of Java script to monitor real-time quotes.

I just lost one weapon (but one that I truly enjoy) to understanding market psychology. (watching the tape real-time, and witnessing how individual names are acting in relation to the market.)

this sucks.

'They' just made me less productive of a worker.

Instead of BS water cooler conversations breaks, I look at the market real-time. That is what makes me happy, not bullshit gossiping and non-value added activities. Everyone looses here. Got to find a way to get my real-time streamer back.

i am not happy today.

the economy

If anyone has a question on how the economy is doing, just look at UNP. The stock is simply on a ripping.

What sticks out at me the most (other than the consistent and rapid rise from 60-72) is the DMI. It indicates a massive inflow to the name.

On Friday, the CEO indicated better-than-expected container growth, and a part of this inflow maybe due to the limited areas funds can now invest in a western rail road. (BNI being the other one, but got bought out by Buffett.)

If I was bearish on the economy, this chart would really make me re-evaluate my thesis.

Its too overbought for me to play it now, but am looking for an entry point.

Market Thought... testing

Testing 1150. If I were a bear, I would be uneasy. (But then again, at this point I would be extremely frustrated at the current rally.)



Here is what I plan on doing...

If the market decides to consolidate here, I will cover my protection around the 14SMA.

If the market does not consolidate here, and moves past 1150, I will close out my protection and just wait in the names I am currently long. I will sell some of the long position as they get overbought or individual triggers are met.

Note:

IBM looks to be starting a sizable move upward here. (I can not be too bearish on the market if I think a big name like IBM is about to do this. It would be a contradiction.) It may test 132-133 with this move.

Market Thought - mistake

I made a mistake. During this recent down turn I neglected to take into account all the patterns, and that neglect caused a false premise in my analysis of the market.

I just realized it today, hence my acknowledgement of it. Basically my market premise to protect was predicated on overbought conditions, crazy movements of the market (during the early Feb decline), sizable decline in the Vix, weakness in some individual names (which gained strength causing the market to fair much better than expected) and the long-term pattern of the SP500 daily chart.

What I failed to do, was assess the above with the pattern of the weekly SP500. If I did that, I probably would have removed my protection, (until this week). I assessed the weekly charts of the individual names that were weak, and the wkly charts seemed to have indicated a floor, but without the wkly SP500 chart, the more cautious approach was taken.

The weekly SP500 clearly shows the wkly 28 and 32SMA acting as support.

I highlight the most recognizable pattern.

So with that, I swallow my mistake. With that said, today was an interesting day, and a clear 'protect' signal was also given.

The Vix was up while the SP500 was up, not to mention the market is at a double top. So I did not get rid of my protection.