Anyhow, as we discussed in the weekly round up, we were in the middle of no man's land to enter the week; with a very tight range of 3.5% (1430 on upside, 1380 on downside). Well in just a few short hours we've come down to test the bottom of this range. Now, for you technical analysis types, I've looked at BOTH the exponential and simple moving averages and both 50 days are sitting nicely at 1379-1380. So unlike last week, both types of moving averages show us the same thing. The S&P has dropped to 1378-1379 so we'll see how the rest of the day unfolds. Generally my strategy is to lighten up short exposure when we head into the bottom of a range and then rebuy that exposure if we break through (no bounce). Now when I did that a week ago Friday (rebuying some short exposure after breaking through "support") we got punished for that, but apparently the simple moving average was still sitting as support. This time, a break below 1375 or so would mean both versions of the moving average will have been broken. Frankly this looks like a text book breakdown; the initial surge down (2 weeks ago) followed by a light volume bounce (last week) followed by a retest down... but that's how things used to work. In this new and improved (managed) markets, we just never know what crazy things will happen out of thin air (see mid April)
More serious students of technical analysis can correct me on this ;) But from where I sit it would be important for the bulls to hold 1380 on a closing basis... if normal historical technical patterns are obeyed. For those of you who don't follow technical analysis, just ignore this whole post and realize we are at a potential inflection point :)
4 comments:
Re: IPI
I probably wasn't clear in my comment earlier so let me try this again with a simpler explanation. But to keep it simple, IPI locks in their contracts every 3-4 months. For Q1, they locked into the contracts in September 2007. So that should mean that for this upcoming quarter (Q2), their recognized contract prices should be the spot price as it was in December-January. Any ideas where that might be?
P.S. Those "brilliant", well-paid analysts kept on asking about it several times during the call. I dont think they quite got it.
You can see the contract pricing history in the newer IPI post. Should be well into the $400s by then, and then Q3 should be well into $500s-$600s.
this whole rally up to the 200 day ma over the past few months just looks like a massive 'bull' rally within a bear market. draw a descending trendline from the peaks in october and december and then now in may. looks poised for a massive move down if we can get a solid break with strong volume. stochastics are oversold through and everytime they've been oversold practically in the last year, there has been a rally. soooo we'll see. trading sideways is fuuuuun!
TM,
Thanks for the insight on IPI and on inflation in Asia. Other facts... I have been looking at coal like crazy... it looks to be the real deal for the medium to long term...YZC as a coal play is speculative but I just came across it... now on my watch list.
BTW... who were you referring to regarding the TA?
;)
But that's been my point exactly. I have been out of the market and heavily looking at shorts since we bounced off of the 200 SIMPLE ;) MA , then bounced off the 50 then retraced almost exactly 50% between where the two points were hit. There are a lot of quants and computers in this market... it pays to know what this does...
Also... the 50 and 200 are converging so one is going to win... I'm thinking VERY strongly we don't go past the 200 and the shorts will be looking very good very soon...
Best,
Jon
Post a Comment