Tuesday, April 28, 2009

Swine Analysis

You can call it what you want, but if the bulls want to blame today's down day on the markets on the Swine Flu "outbreak", to me that is just poor analysis. SPG didn't go down 10% because of a virus. Cummins didn't go down 5% because of 20 people in the U.S. had the strand.

The market went down today because we are in a TA cycle where the next leg is down. Period. We will have a retracement down below 800 and perhaps all the way to 760. It won't be a straight line. There is some strength on the bullish side that will buy on dips. But we are headed below 800 before we get above 870. It appears to be a double top and if we can break below 840, I think the run to 800 will meet less resistance. The up moves will be caused by buying on dips and MM's trying to shake out shorts and/or suck in longs. Everyone will lose. At least that's the plan for the MM's.

So you have to recognize what is happening hear. The retail investor will get hit hard as they panic-sell on moves down and panic-buy on moves up, being wrong on both ends.

To me, SDS is the play here or going short SSO. That is really all you need to know. We all know REITs are a scam right now, but the powers that be are in control and while SRS can bring some explosive moves, the game is being played and you have to use SRS as a trade and a trade only. You have to take profits as you can and not worry about missing the big moves up.

I continue to be short AXP and not feeling great about it despite today's move. I have a stop put in at 26. If it goes above 25 again, it is probably not a good position for shorts as the next resistance is not until 30. I have to believe the reality sets in and it corrects back down to the 20 dma.

The SPX appears to be at the top of a downward moving curve via the 20 dma. The VIX is right at the 20 dma and appears to be ready for a breakout. 34 days at or below the 20 dma is enough and the last time it did that was from July 18 thru August 28th. The next two months were the crash triggered by the Lehman collapse. Lets hope the same does not happen but if the VIX closes above 40, I think we have confirmation we are entering a retracement period.

Energy is not a good play right now and I think Gold is dead money for awhile. I still am skittish about banks in general but if I had to play anything, I would play BAC short. Oh, never mind, I already am.

1 comment:

  1. Check the news. C and BAC appear to need billions of capital per stress test results per WSJ. I can't wait to see Bob Pissonya's face tomorrow.