Back to Neutral

I am back to a neutral signal for now.  The tape is not breaking down by any means.  Maybe it will later this month, but for now it just seems like we are not going to get any major sign of weakness in the market yet.

It looks as though earnings season the next couple of weeks is going to prop up the market for a bit longer.

I although thought the UUP would get a fast break up soon.  It may still do so and cause the market to take a hit but for now it is struggling a bit at the top of the recent resistance range.

This market is a very difficult one to time with traditional oscillators such as MACD.  It is a very strong trending market and continues to ‘pull’ the MACD high despite all the sell signals.

My previous strategy of simply respecting the tape action of the market still seems to be the way to go.  We have still not broken the up trend line by any significant means.

Posted in BOT Neutral
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11 comments on “Back to Neutral
  1. JR says:

    I don’t know. I see a lot of weakness in the tape. As you know I closed out my longs last Thursday, for example AA. Today, Alcoa is down on higher earnings, not a good sign.
    Or look at some of the high fliers like OPEN. Or solid stocks like Ford, struggling.
    To me the tape is typical of the beginning of a correction.
    Today, I went short(7000 shares @ $17.42) on RSH (Radio Shack). I am far from all in on the short side, but I have put a big toe in the water.
    Of course the truth will be revealed in the fullness of time.
    But I would be slightly short or not in at all.
    So I guess your neutral sign can’t lose.
    But I think the market is neutral to down!

  2. Austin says:

    I agree with JR. I have been short the SPX for about 2 weeks now with little movement. I will hold my 60% insurance package against my long for now. its getting kind of boring unless you are an intraday trader…

  3. Austin says:

    JR i would say thats a good pick on radio shack. what price are you looking for? looks like 15.00 ish is not out of the question..

  4. Geoff says:

    Doug Kass Expects Reversal This Week
    By Jonathan Chen
    Benzinga Staff Writer
    January 11, 2011 13:29 PM

    Read more: http://www.benzinga.com/trading-ideas/short-ideas/11/01/770589/doug-kass-expects-reversal-this-week#ixzz1AmfWkCiv

    According to the very brief blurb, Kass thinks way too much bullishness.

    I sort of thought that today was going to be the reversal day, but “they” may try to keep the market stable thru tomorrow which is day that Aall monitors investor sentiment. . . can Aall post another increase in bullishness at the close of business tomorrow? The Consensus Index was 72% bullish last wk and 71% bullish the wk before that.

  5. ed says:

    Still looking at rising wedge upper limit at 1290 on SPX

  6. Tom Tom says:

    Actually the tape still looks strong to me which makes me wonder why I even bothered trying to pick a top again. There was no weakness in the tape, nothing very obvious. Plus, we cannot even create a minor bottoming tail on the weekly, monthly, quarterly and yearly candlesticks which is astonishing.

  7. Tom Tom says:

    I suspect the market will drift higher into option expiration and then maybe after that there is a chance of some kind of pullback but not before..

  8. Tom Tom says:

    Nice call Ed, I believe you are correct..

  9. JR says:

    Austin I think there is minor support at 15 for RSH. At that point I would be watching it closely. If it fails then I would load my shorts up and look for somewhere near 12 as my exit point.

    Tom: I have seen markets like this many times. This market is really not a particularly good trading market. That is trading within fixed up and down parameters.
    Rather it continues to trade upward.
    What we may be seeing is a rotational correction. One stock or group of stock correcting and then another.
    However these type of rotational markets can be very dangerous, since one rotational sector can trigger a mass decline.
    Which, incidentally is what I think will happen.
    But as previously stated, we will find out in the fullness of time.

  10. JR says:

    EW is predicting a wave (v) of (v) topping on the $S&P around 1310 which isn’t that far from 1285!
    Also interesting is the $S&P 500 RSI (1/12/2011) at 43.71 which to me points to a lack of conviction with the bulls.
    Also of interest, the short interest is the lowest in 12 months.
    EW and contraraian theory points to an eminent down move.
    With such a small short float, there will be a lack of short buying support to slow the downside move.
    Collectively the (v) of (v) and lack of short interest points to a very sharp move down.
    But time will tell.

  11. JR says:

    I went short on LVS @ 47.36
    Who can tell, this might be IT!

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