Monday, March 2, 2009

S&P 500 Stretched to 34% Below the 200 day Moving Average

We wrote in this weekend's summary that the peak (intraday) hit in November 2008 was a 37% divergence between the actual price on the S&P 500 and the 200 day moving average. Again 25% is considered extreme, and 37% was the largest divergence in history.

I still have my short hedges on but if we have an ugly close and an ugly morning tomorrow it would seem a good place to get long. The rubber band is stretched extremely so and now we are seeing the waterfall type of selling - the term I use for "8-12% type of losses" in many many names. Sloppy selling - get me out. Doesn't mean *this* is the bottom but I'm getting more constructive for a trade on the long side soon.

When this bounce comes it should be a doozy.

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012