The spike upwards in the SPX occurs, JJC jumped up and over 48.43 adding the bull fuel. Interestingly, the NYAD spiked above +2000 and, as Keystone has been discussing over the last couple days, the bullishness is now uber high so markets typically want to hand traders a selling period. SPX popped up thru 1355, then up thru the 20-day MA to peg 1363, but has languished since.
This early action is important. Keystone's algorithm wants to return to the long side right now but needs to see the SPX travel up and over 1363 again and hold that level. The SPX:VIX ratio is over 68 favoring bulls. The drama right now is at the SPX 20-day MA at 1358.84. SPX now printing 1358.86. Isn't that something? Use this 20-day MA as a determination of who wins today, bulls or bears. AAPL is down in early trading and tech is not leading the broad markets, during the futures period as well as now. SPX 1358.84, 1363 and JJC 48.43 will tell you the story today.
Note Added 3/8/12 at 12:52 PM: The SPX overcame the 20-day MA which favored the bulls, then the 1363 level was achieved. All the major sectors are in the bull camp. Volatility remains low. AAPL is up today adding to tech strength. In the futures market and the early trade, the Nasdaq did not lead the SPX to the upside so the markets languished after the opening pop. About an hour or so ago, the COMPQ started to outperform the SPX and this added the bull fuel to push the SPX up thru 1363, now printing 1365.67. Keystone's algo flipped to the long side but remain extremely cautious; the markets may reverse hard just as easy. The broad indexes remain unstable.
Note Added 3/8/12 at 1:37 PM: Into the close today, monitor the percentage relationship of COMPQ versus SPX to determine if tech wants to keep leading the broad markets higher. The SPX is up +0.93% today with COMPQ up +1.13%, thus tech leads the broad markets higher. If you see the COMPQ no longer leading the upside, that will occur in concert with the broad indexes moving down. Watch JJC 48.43. SPX S/R is 1376, 1372, 1370, 1368, 1366, 1363, 1361, 1358. The 10-day MA is 1364.02 and the 20-day MA is 1359.14. Bulls are cruising but markets are unstable.
Given the charts and all the macro issues, has anyone ever tried a strategy such as this: hold/buy index shorts or volatility longs here and then just check two numbers at the end of each day: the SPX and the SPX 200MA. Start selling the shorts only when the two numbers meet. Don't do anything till then. Just relax. Maybe go to Florida. What would be the odds I'd finish ahead?
ReplyDeleteHello Weaver, that is a longer term strategy. You are assuming this price level will serve as a significant top. That should be a logical assumption, but SPX can print from 1364 to 1386 in here, and who knows if quantitiative easing hits. The rally yesterday and today is due ot the sterilized QE talk.
ReplyDeleteIt is probably more important to scale in instead. Thus, if you feel this is a significant top forming divide the desired size of the positon by either thirds or fourths, then buy 1/3 or 1/4 of the position first, then wait a couple days or so, then perhaps another portion. Having capital available is one of the ways to stay in a position and average into the position.
The exits from such a strategy may be tricky since price will hit the level intraday, then bounce, maybe collapse down thru, but then catapult back up. Technical analysis, chart patterns, support and reisstance and trend lines seem a much better approach to take advantage of all peaks and troughs on your way to the 200-day MA.