End of Month Reversal?
Started Jun 29 2009 at 10:48PM (EST) (By korenidan87)
VISIT: WWW.STOCKTOCK.COM
First of all I want to go ahead and admit that I was wrong when I said that the market would go up early in the morning and then reverse in late trading to fall about 1-1.5%. That was my intuition but it obviously didn't happen. The market continued to stay at very strong resistance but failed to break it. It looks like my down day might get delayed by a couple of hours and take affect either tomorrow or the day after. Tomorrow is an important day as it is also the last day of the month. At this point i would rather be more bearish than bullish as we have the H&S formation still in play and a lot of resistance from over head, and today's volume was incredibly low (as low as fridays or even lower). I look at different charts to show how the bearish side looks more promising, but I stay neutral on some action. I view SPY, XLF, GS, AAPL, AMZN, VIX.
First of all I want to go ahead and admit that I was wrong when I said that the market would go up early in the morning and then reverse in late trading to fall about 1-1.5%. That was my intuition but it obviously didn't happen. The market continued to stay at very strong resistance but failed to break it. It looks like my down day might get delayed by a couple of hours and take affect either tomorrow or the day after. Tomorrow is an important day as it is also the last day of the month. At this point i would rather be more bearish than bullish as we have the H&S formation still in play and a lot of resistance from over head, and today's volume was incredibly low (as low as fridays or even lower). I look at different charts to show how the bearish side looks more promising, but I stay neutral on some action. I view SPY, XLF, GS, AAPL, AMZN, VIX.
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12 Comments
Top 1%
lobots10
Jun 30 2009 at 5:05AM (EST)
What's your take on emerging markets...EWZ....EDC...etc...are they setting up for a summer swoon or will they march on and lead us out of the "Great Recession"...Personally, I think their performance is key to the future of world markets as a whole, but then again so do most people..
Top 2%
shlomi
Jun 30 2009 at 10:14AM (EST)
As always, great post!
Top 1%
beancounter
Jun 30 2009 at 10:42AM (EST)
I sold my shorts at the open, so expect a significant downturn. :-)
Top 1%
maven100
Jun 30 2009 at 11:12AM (EST)
Today I agree with you Mr. K....I have been trying to reduce my beta in real accounts as well as in MG...Keeping a few positions that will likely not get too hit with the market since each has its own catalysts to hold them up near term...In general, I continue to remain cautious into the independence Day..as we should see earnings results in earnest starting to hit next week...and the volumes have been very very low...so volatitlity will likely pick up...Given where we are relative to market expections just has too much risk...Techinals, fundamentals and even the sentiment is just not condusive to what I would consider to be a very favorable risk/reward...I would definitly suggest to take some high beta stocks unless you have a very compelling case to hold them over the next few weeks.
Top 1%
dirtyharry
Jun 30 2009 at 1:12PM (EST)
We migh have a small H/S pattern forming, with the right shoulder about to swing down. If 880 breaks, look out below....
Top 1%
beancounter
Jun 30 2009 at 1:36PM (EST)
I already got singed waiting for it, looks like I was a little early.
Top 1%
korenidan87
Jun 30 2009 at 9:54PM (EST)
EWZ is incredibly important as brazil holds most of the primary resources needed when the global economy rebounds. If we take a look at the 60 minute chart of the ETF... just like the S&P, we will see a very clear Inverse H&S with a neckline around the 54 level.. however the action today was not as bullish as that of the S&P. The S&P managed to reverse somewhat nicely, whereas the EWZ just seemed for form a bear flag... Depending if we break down or break out we will know if we are expecting continuation of downside or upside. My guess would be downside...
Top 1%
lobots10
Jul 01 2009 at 4:02AM (EST)
Thanks, I too expect a correction since I'm not at all convinced that "decoupling" has arrived yet...but this financial crisis will prove to be the test...I think if the US consumer is not healthy, ultimately emerging markets will reverse course...I also think the surge in emerging markets had more to do with inflation fears...if "deflation" reappears well we will see a quick reversal...
As you so, today and tomorrow will be (should be) important BUT we are trading on low volume and the FED and its henchmen manipulate this market at will
Good Luck
Top 1%
lobots10
Jul 01 2009 at 4:02AM (EST)
so--say
Top 1%
lobots10
Jul 01 2009 at 4:08AM (EST)
EWZ: however the fact that EWZ is consistently trading above the 200 and 50 mva makes me worry...I hear don't "fight the trend" ringing in my head...does this give you pause as well??
Top 1%
lobots10
Jul 01 2009 at 4:43AM (EST)
and of course most show the same pattern TUR IFN....
Top 1%
korenidan87
Jul 01 2009 at 10:58AM (EST)
yeah definetly gives me a pause.. but the trend has been broken 2 weeks ago... we are now looking for a new trend... it could be another move higher (but itll be a diffrent pattern). Last time we had a channel formation up... we'll see what happens now.