Saturday, May 9, 2009

Weekend Wrap Up (05/04-05/08)

S&P had another strong week while the NDX is starting to show some signs of weakness as it had its first down week after 8 straight weeks up. In the last couple of days the market showed some signs of the weakness as we saw some violent intra-day swings mainly from news/speculation that had to do with the stress test as well some important economic numbers that came out. Technology was the only sector that lost any significant strength, now we have to see if this weakness is able to spread to the other sectors. The SPX chart looks fairly strong and we are getting very close to the next level of resistance around 940, for the current bearish case to hold we need to see a faliure at the that 940 region which was a previous h&s pattern. But we are still seeing more stocks register new 50 day highs, so overall outlook is still(cautiously) bullish.

The ES seems to have broken above the channel it was in before and it is now in a much more steep channel that will not be lasting very long, but it does does provide us with some key levels of resistance and support. The NQ is much the opposite, for the first time in a long time it has made a decent attempt at a move to the downside. Also, in this rally the Nasdaq has been the leader of the market, so this weakness could be a warning sign. The fact that the Nasdaq and S&P are moving in opposite directions shows that the market is confused and a confused market usually means it is not very healthy. There is still no need to jump on the bear bandwagon but it is a cause for concern, I am still net long but I am more hedged towards the short side.

I had an okay day as I was up a little bit overall, most of my shorts where up and my longs were mixed but once again a lottery long gave my portfolio a very nice boost. My FMD long went up +28% on friday, as you can see in the chart it found some support around 1.66 level and shot up from there. I also took profit on my DBC long which broke out of a bullish flag as well as my STZ long. I had some pretty good gains from both these and since I am unsure of the market and seeing signs of a potential downside I decided to capture profit.

DBC break out:

Short candidate, GWR:

Pontential breakout, WMAR:

In general people still seem to be wearing their rose colored glasses, but this market has been going up way too fast, if we consolidate here it will be much healthier for run up to 1200 in the SPX. A lot about bears are complaining about market manipulation, but it's funny how people only seem to complain when the manipulation is going against them. Much like how the bulls kept complaining about aggressive short selling and how we need to implement the uptick rule while the market was dropping like a rock.

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