Weekly SPX

With the exception of the two bars indicated below, every other weekly close on the SPX (since last Oct) has treated this blue line as either support or resistance - 870.


The 23.6% retracement level, from the all time high in the S&P down to 666; corresponds to 877


Daily trendlines - resistance between 875-900


The market is up 30% in 26 trading days. I don't have a ton of confidence in market direction nor any interest in taking on additional positions right now. Fundamentals are nonsense right now and TA isn't doing too much better. If we get to SPX 870ish I will consider initiating more shorts or selling OTM call credit spreads on some individual stocks TBD. If GS and friends report better than expected earnings, which of course they will, look to get long FAZ early next week, below 9. By some measures (Bespoke) the S&P hasn't been this overbought since May 2001.

Now What?

First of all, I want to congratulate WFC on $3B in Q1 earnings! On an unrelated note, I stopped marking my house to market, and it also is worth $3B! What a great day. It makes my small loss in GS look like unsalted peanuts.

Speaking of GS, I have analyzed the recent trade below (click chart to enlarge) to hopefully keep me from making similar mistakes in the future. I think it boils down to a poor entry, which equals a non-low-risk entry.
GS


GS (big picture)


Back to the overall market:
SPX



QQQQ

SPX

SPX - next stop 850, but be aware of a likely oversold bounce.


I will remain short this market via the XLF with an extremely tight stop. I chose to override my system which suggested I cover at the open. But since XLF was trading down pre-market there wasn't a sense of urgency to do so. Current trailing stop: 11.09.

See below for additional setups from 01/09 that still hold - XOM, CVX, SRS, SKF, GLD, etc.

Watchlist

XOM - Up against its lower trendline. You could go long with a stop beneath it; however, I would look to go short if/when the trendline fails.



CVX - same.



GLD - still bearish in the intermediate term.



AAPL - will ultimately resolve itself south of 85. Remember, there's rarely such thing as a quadruple bottom.



SRS - Get long (not necessarily a short term trade)



SKF - Get long (not necessarily a short term trade)



SPX - Actually looks okay on the 60 day chart but keep in mind the big picture. Plus, all of the so-called significant levels (920, 900, ...) keep failing so I wouldn't bank on any support levels on the downside. Overhead resistance continues to be dominant.

Update

There were a lot of significant breakouts last week - most notably SPX closing above 920.


In the short term I like the odds of a pullback but in the intermediate term this chart below shows where the market might run to (underside of magic orange line)while encountering tons of resistance along the way. And if the market is somehow able to climb to S&P 1000, that will present a magnificent shorting opportunity.


Being long AAPL with a stop under 85 finally paid off on Friday. This may have some more upside but I eventually see support at 85 failing.


BHI didn't work out quite as well, though remains extremely overbought.


After last week, both USO and GLD look to have given traders another opportunity to get short.

800 lb gorilla in the room

If I step back and look at the S&P, the next 'obvious' target appears to be 800.

In the near-term, a bear market rally is highly anticipated and likely but in the longish-term, heading down to 800 seems like the path of least resistance, yet hopefully it will act as support.








In the interim, I see two options.

1) Buy some Calls with the inevitable (eventual) bounce and hope that there is no volatility crush (when IV drops in dramatic fashion along with the value of your options) and/or in the very short-term, hope that you can sell your overpriced calls for more than you overpaid for them.

2) Start making a list of optionable stocks that bounce too much and thus setup a great Put buying opportunity. Hopefully at this future time the options market will start to resemble normal.

Oh, stupid July

If you had bought the SPX one month ago, your daily changes for the month of July would have looked like this. If you were smart enough to remain on the sidelines, as I did, self-congratulate yourself.

And if you actually made money while being able to sleep at night...kudos.

Losers of any game typically lament that either the game was rigged or it is one no one can beat; thus, their failure is excusable.

~ Larry Williams

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