Tuesday, June 8, 2010

Getting Bulled Up

It's gotten pretty harsh out there over the last 6 weeks, but the market behaved in line with my Two Week Outlook from May 27th, here, and now some charts are starting to come around.  Last afternoon I tweeted:

About 5 minutes later the sellers pressed and boom, volume picked up nicely as bids got hit.  I have a trading rule that does not permit me to purchase options more than 15 minutes before the end of a day if using said naked option as a short-term trade (unless there is major, market moving news that is single stock-based).  Frequently, though, by tuning in early you can get a gauge on tomorrow irrespective of what the underlying stock price is doing.  I saw favorable activity last afternoon and the futures are presently shaking off a Euro-zone shanking at the hands of some comments from Fitch related to the UK's tough times ahead.

I think we could be in for a nice little run here, with my target being 10600-10650 over a period of 5 to 7 weeks.  This target locates the middle of some heavy volume candles and probably a bit of overshoot of a confluence as the 50 dma continues down-trending.

The best price action should be in names like GS and V where the price has disconnected from "reality" enough that the sitting-on-cash contingent, hungry for brand recognition, awaits the all-clear.  I continue to avoid stocks in the realm of middle class consumerism, and view yesterday's consumer credit report as a dangerous indicator that a brutal, sustained hardship for lower and middle America is here to stay.  Double-dip?  I think the possibilities are underestimated by the "pundits" whose rose-tinted opinions are picked by TV producers so as not to offend the largest segment of their audience ... The Cramer Crowd.

Tighten up the stops in short positions with large short interest, if everything goes to plan better opportunity should arise in a month or two.

I had high hopes for David Faber's lunch show "Strategy Session" but, admittedly, tuned out after about 10 minutes.  Why does CNBC have to trick everything up so much?  All those market depth indicators in the background distract from the reporting going on in the foreground, and the apprentice camera men obviously know that Obama's not going to shake anything up on the union front because they're terrible, but obviously the best there is since CNBC is "where the world turns for business."  Finally, using an overhead camera to zoom on a screen in the desk?  Is there no middle ground anymore?