Wednesday, June 10, 2009

S&P Still Cannot Break Through 200 day Exponential Moving Average

Due to this fact, I am increasing index shorts measurably for the first time in many weeks. Until/unless we get back over S&P 947 and can hold it, I'll maintain this for the short term at least. All shorting has been a fool's game but I'm a fool for love I suppose.

In addition, I am shorting the reflation trade here via shorting Ultra Basic Material (UYM) and Direxion Energy Bull (ERX) - I am targetting the blue lines (20 day) to cover. These are both about to form "double tops", or start a new leg up - we'll know very soon. Usually I am more reactionary than anticipatory but in this case I'll anticipate a double top and cover if I'm wrong.

I could buy the SMN and ERY to get the same effect but for record keeping it is easier for me to observe my short versus long exposure by shorting the long ETFs. In the real world if an ETF is hard to borrow than of course you could just "go long" the inverse.

I'll have tight stops because of the bond auction at 1 PM; it could move this market wildly like a Fed decision. Or this lull could simply be a bear trap before the requisite "bid" comes out of the blue to support the market.

However, when the market stops going up on "good news" that is a sign of weakeness - we saw it last Friday on the "great" employment report and again so far today. Hence my decision. *

*please note - every decision to go short the past 3 months has blown up.

p.s. mortgage applications this week were horrid as rates continue up. But no one cares. Stocks can only go up.

Short UYM, ERX in fund; no personal position

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