When Are These Markets Breaking to the Downside?
In one of my brokerage accounts, I put a few bucks into ProShares UltraShort S&P 500 (SDS).
Luckily most of that account is in silver and gold interests, since the S&P has done nothing but go up since then.
My reasoning for going short? The S&P is forming a rising wedge, which is usually a bearish indicator. Also, I have been waiting with bated breath for the next market downturn. When is this thing going to break? I’m not ready to give up yet. If readers have sound reasons for doing so, I’d like to hear them.
Would Brian Johnson of thestockmentor.com care to weigh in? I could use some expert advice.
See you next time! (When is it going to get hot this summer? Sometime before the next blizzard?)
Quote of the Week:
“The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it.”
~Terry Pratchett, English Writer
Buried News of the Week
I nominate myself for the buried news of the week. (”How conveeeenient.”)
After watching the O’Reilly factor for two nights in a row, 09-08-09 and 09-09-09, and listening to what I thought was spin, I decided I had to finally write the guy. Readers, please feel free to copy my idea and try to get this on the air during the e-mails portion of his show (oreilly@foxnews.com).
Here it is:
Dear Mr. O’Reilly,
If Charlie Sheen is a “pinhead” regarding his 9-11 theories and you believe that questioning the U.S. government’s version of 9-11 is enough to disqualify a person from public office, then could you please provide some guidance in crafting O’Reilly approved petitions which seek a redress of grievances?
Sincerely,
Aaron Grow
Hill City, South Dakota
September 14th, 2009 at 11:46 am
Hey Aaron! I thought I had commented on this already but maybe it didn’t submit correctly. I’d love to put in my 2 cents!
It’s Monday morning and the futures moved down quite a bit last night only to see a bunch of bulls continue to buy the dips when the market opened. This has been the main story for the past few weeks. Just as the bears get all excited about a move down the bulls step in and slap their hands for even thinking of pulling the market down. This action, in my opinion, is just a lot of people coming late to the party and in the next month or so they will be wondering if putting money into the market was such a good idea. I can start to see distribution by the smart money up here and while that doesn’t necessarily mean lower prices in the next few days I believe lower prices are coming in the next few weeks.
The rising wedge you’ve been watching has now turned into more of a rising channel the past couple of weeks. A break above the 1055 area on the SPX could signal higher prices up to 1066 or so. The lower end of the channel is down around the 1005 area and a break of that would be pretty bearish in at least the short term and possibly the long term.
Currently there is a lot of support below us so the bears have their work cut out for them as we move forward. I’m watching these moves to the upside with wary optimism. Nothing’s broken so there’s no reason to think we can’t go a little higher here but even as we enter the fall season in SD I can hear the growl of spring bears emerging from their caves.
September 21st, 2009 at 8:41 pm
Is it starting, Brian? SPX closed down today over 3.5 points at 1064.66. During the last three trading days it looks like the rising channel you mentioned is losing steam, right in the area of resistance you predicted one week ago.
I got the heck out of SDS back around 1040 I think it was. I took about 5-6% loss on it. Hopefully I can make it up and then some when this thing turns.
I’m assuming you’re going to wait until SPX breaks 1005 before you go short. Is that your plan?
Are you long or short any of the indexes right now? If so, what are you in?
September 22nd, 2009 at 12:56 am
The market did push up right into the 1065-1066 area and managed to make the 1070 area before turning back. That was a very staunch resistance area on the weekly SPX. The number to watch at this point is 1050 or 1040 to the downside for the bears and above 1075 for the bulls. A push above 1075 would most likely see more covering by the bulls and another push to 1085 then 1100 above that. As we stand tonight we are still in an uptrend in the near term so I’ll continue to trade that way until something gets ‘broken’.
I’m looking short below 1050 on the indices and long above 1075 (for a very quick run and then cover at the 1085 - 1100 area).
The BANK index is still looking mildly strong and if it pushes up the banks will move with it and in effect carry the markets higher with them. Another item of interest is the dollar. It is moving inverse to equities right now and will have to find support and turn around before the bears can really start to make headway.
I entered DV on a breakout above $53 which I mentioned in my video and APEI above $35 also per my video.
Watch BIDU above $410, ALB above 35.25, and AIRM on a push above $36 IF the markets continue upwards. If they fall then look at ORN below 20.80 and ANEN below 15.75 as good short candidates.
September 27th, 2009 at 5:04 pm
Don’t know if you’re still watching this Aaron but the bears had a pretty good push at the end of last week after the Fed’s talk. The end of the month is coming so I’m interested to see if the bulls try to ‘window dress’ the end of the month with a move up the next few days. Keep your eye on the 1040 area on the SPX. That’s a line the bulls will want to hold this next week. I posted some new plays for the upcoming week as well you may want to keep on your radar.
October 1st, 2009 at 5:44 pm
Well….so much for the 1040 level I mentioned!
October 3rd, 2009 at 2:15 pm
Yeah, no kidding! 1040 was sliced through like butter.
Uggghhhhh!! Now I know what you mean about disappearing comments. I had a comment for you between Sept. 27th and Oct. 1 and the dang thing is now gone! How aggravating!
I’ll get a new blog up; I’m way overdue.
I’ll also check your site and your recs. Thanks for your help.
October 5th, 2009 at 12:49 pm
No problem Aaron.
The bulls now need to regain the 1040 level and ultimately the 1050 area in the bigger picture. If they can’t make it back up above those levels and the bears drag this down near 1005 then we could be in for a more sinister bear move in the markets in the short/mid term at least.