Reconsidering the Short Side of the Market

SPY20091105

I had to close out my shorts very early this morning near the open.  I thought for sure that the nasty intraday bearish reversal we saw yesterday on the Fed decision would set us up for a really hard down into Friday.  But now it is looking constructive again and I gotta tell you in the back of my mind I cannot rid myself of the thought that ‘they’ may try to rally this market hard right into Thanksgiving week again.  The rally may be labored and the upside limited. But a rally is a rally is a rally.  I don’t want to stand in front of that.

So I am going to have to stand aside for a bit and see how this all shakes out.  If you look at the chart above on the SPY it is undeniable that we continue to show higher highs and higher lows.  The freaking bears could not even take out the 3rd underlined low yet after all this technical damage.  They may still do it, but they had better hurry up. Yesterdays action was the perfect setup to take a shot at the 3rd higher underlined low but they did not take charge and get the job done (the bears that is). 

So it would seem the bear case is somewhat delayed.  It remains to be seen how high this bounce can carry and if it can carry to new 52 week highs.  If it does that then it is going to flip the weekly macd into a failure pattern where price just keeps pushing higher and higher and higher and just has the weekly macd bouncing all over the place similar to what happened in the 2004 to 2006 recovery period.  It is too early to make that call.

But one has to give the bulls credit for not giving up yet at this point and that has to be respected in my opinion.

The daily stochastics are in up turn mode and I am going to let them run it for a while.  When and if we get some sort of negative setup again then I may reconsider the short side again.

Maybe the market wants to run up right into the combust date of November 9th (also a bradley model date) before turning down again ?  We shall see.

Posted in Index Trading, Market Timing, SP500
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