My idea to “short every stock with the word automobile in it” continues to work out nicely. Every single issue I mentioned in last week’s Auto Crash post is down, and this morning you can see particular damage here:
Hey, everyone, just two weeks until we elect President Pandering Pantsuit! Are you excited as I am? Yeah, that’s what I thought.
Anyway, my largest concentration of shorts remains in the energy sector. Crude has been in a tight little jail cell ranging from 49.62 to 52.22 for weeks now. We’ve got a shot of breaking this range, but even if we do, there’s strong support at around $48 where that blue trendline is. All the same, the energy short charts look a lot better than this one, so I’m sticking with them.
As the VIX got pounded back into the sub-teens today, it occurred to me to compare the present activity to the period preceding the financial crisis. What I found was interesting. The chart below (click it for a much bigger version) shows 2003-2007 on the top and recent history on the bottom. You may notice a lot of similarities between the top and bottom, and I’ve drawn a red line at the top showing the equivalent of “right now”.
The low window on SPX ended on Friday, and there wasn’t much at the weekend to suggest that prices would go lower this week. With RUT testing main rising wedge support at the low on Friday and NDX retesting the all time highs today, there’s not much to cheer the bears that has happened since. If you want to see that support hit on RUT, you can see that on Friday’s post here.
On the daily chart the key resistance level is the daily middle band at 2149, and SPX has been trading around that today. Bulls need a closing break above it and a confirming close above the next day. Bears would obviously like to avoid that if possible. The tape itself seems fairly indifferent, particularly in the afternoons in recent months. SPX daily chart:
Facebook has, against all odds, become just about the most reliable, stable, always-making-new-highs stock since Amazon came onto the scene. It’s actually pretty shocking to witness, since irrespective of market conditions, Team Zuck just keeps soaring.
Weird morning so far, eh? All I heard about, over and over again this weekend, was the big Time Warner (TWX) buyout, with a purchase price of $106 per share. Right now it’s trading at 87.48, down about 2.5% from Friday. Umm, I don’t even care enough to explore why, but it hardly sounds like an orgy of excitement to me.
What’s crucial to my eyes is for the Major Market Index to retain its broken trendline and stay beneath the gap I’ve highlighted below.