Thursday, August 19, 2010

S&P 1070 the Floor for the Day Thus Far

I mentioned in an earlier piece today I'd add more shorts if the S&P 500 could break through S&P 1070 as its a very obvious line in the sand (lows from last week).  This market has become so very technical as every piece of silicon now acts in concert, with the last remaining humans.  Thus far, we've come into 1070 twice and bounced.

So this is the eternal question at these points - do you take your profits on index shorts here and then reapply them on a break of 1070?  Or just sit and wait patiently hoping for a break, rather than an end of day 'stick save' bounce?  I've debated that about 4 times mentally already.   If I had much larger positions I'd be taking some profits in the 1071-1072 area as I could have swooped in and received a quick 9 S&P points for a few hours of work, but since my cash level is high and my index shorts (BGU/TNA) are modest (only 4% allocated) I am simply observing and I suppose willing (I wouldn't be happy about it) to give up some of the gains if said end of day stick save occurs.  My decision from here is if we break to the 1076+ area I'll probably cover and take small gains on the 2 index shorts (BGU/TNA) and then wait to see what happens. 

In the bigger picture as long as the S&P 500 remains below 1086 or so, the onus is on the bulls... there is no major economic news coming tomorrow so almost always we drift up in a low volume way in those situations.  If I cover later today I'd want to reshort indexes either nearer to S&P 1086 or on a break below 1070.

EDIT 3:15 PM - I covered my shorts here around 1076 since this is about the time of day we've been trained to expect the "hockey stick save" rally.  Since I entered my shorts at a bad spot (S&P 1080 rather than S&P 1085) I don't have much room for error to retain profits.  If I'm wrong and there is no "last 30 minute rally", so be it.


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