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Tuesday, November 4, 2008

Let It Bounce, So We Can Short Again

The S&P 500 has finally strung together two consecutive up days in the month of October. Volume has rapidly declined as prices approached resistance round the 985 area and the declining 20 day EMA (blue line).

Ultimately a bounce to resistance around the 1050 – 1070 area is possible.

The Nasdaq Composite has put in five straight up days on rapidly decreasing volume. Futures are up pre-market, so that could result in the sixth day. Prices are at resistance around 1782 and the declining 20 day EMA (blue line).

Ultimately a bounce to resistance around 1900 is possible where the declining 50 day EMA (red line) should come into play as well.

An Obama win might be the catalyst as the world feels a brief, naive rush of relief, change and hope.

I think the economic data; especially the borrowing needs of the treasury on Wednesday and Non-Farm Payrolls on Friday will bring those hopes crashing back to earth.

I will be using this opportunity to get rid of my last longs from the panic days earlier in the month.

Let it bounce, so I can get heavily short again above 1000 on the S&P 500.

7 comments:

navid said...

Ben,

Where do you like to focus this activity. We have the international banks HSBC, Barclays, but the bailout factor is there. We have the big banks, but they are untouchables.

We have bankruptcy possibilities, REITS, Homebuilders, and automakers and anyone else debt ridden. However, you have to pick your spots.

Do you prefer a short the index approach.

Ben Bittrolff said...

Navid,

Index futures are quick and easy. Various index and sector ETFs of the vanilla and ultra variety.

ER said...

Using options on the index ETFs (SPY, DIA, QQQQ) has been working pretty well for me.

Ben, just want to say great work. I really appreciate the charts and analysis.

Andrew said...

Hi Ben,

I'm emailing you in regards to a followup email I sent you a month ago in response to a partnership, have you had a chance to think about it?

If you have any questions or would more information, please advise me and we can go from there.

Kind Regards,
Andrew Knight
Website Manager
Banking & Finance Division

Online Marketing Group (OMG)
p: (07) 3368 2666
f: (07) 3368 2670
e: andrew.knight@omg.com.au
w: www.omg.com.au

Anonymous said...

I think the bounce is done. Not enough strength to get it back to the 50 EMA. NFPs on Friday will be killer.

I'm short as of 3:59:55PM yesterday.

-Mike J

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