Back from vacation and market in the tank

spy0624.pngI’ve been away from the market for nearly two weeks. Before I left I was worried about the deteriorating technical condition and the very weak advance/decline line. There was certainly some good downside to trade. I was close to changing the baby bull and putting the bear back in the box in the upper left. I hesitated, trying to give the market a little more room, thinking the crude bubble could pop and the dollar to bounce a bit more, which could let the markets find at least a bounce. Today the market looked a bit indecisive ahead of the Fed announcement, as the indexes closed about where they opened, after testing levels higher and lower. The downtrend looks like it is gaining some momentum, however the market is getting oversold short-term. There is a slight divergence in the double stochastic. The Fed announcement could cause some relief depending on what is said. It is expected that interest rates will stay where they are for the moment, but the wording of the statement could cause some relief if it is dollar bullish, inflation hawkish, which could help deflate the oil bubble. I have no position or opinion ahead of the Fed. With the downtrend as it is, I will want to sell rallies and only daytrade rallies.
My gut says to short crude, but I’m glad I am being patient. This market is still in a strong uptrend with little sign of a top. There is little else being talked about. Trends and momentum are all still up, however this last cycle up is fairly flat which could indicate momentum waning. When it pops the first drop could come fast and without warning. Picking tops is very expensive. Better to wait for the trend to change and then sell the many rallies that will follow within context of a downtrend. But for those inclined to trade the short side and not wanting to trade the futures, there is a new ETN that is a double short position on crude. Ticker is DTO. I don’t know much about it yet. I just downloaded a huge pdf file on it, but haven’t yet read it. I watched it today and it seemed to track inversely to the USO etf and at about double the percentage. When crude pops and some of the other commodity plays pop, there could be a new crop of momentum leaders that will benefit from these possibly changing trends.

2 thoughts on “Back from vacation and market in the tank

  1. Ya go away for a few day and what do you find when you return? PANDEMONIUM ON WALL ST!!!

  2. That’s for sure. It happens every time. I should chart my vacations and compare the timing with major market moves. At least I’ve learned to close out my positions prior to leaving town.

Comments are closed.