The perma-rally in the stock market is getting thinner and thinner, both in terms of breadth and daily range. Just take a look at the Dow Jones Composite; this wedge is getting ungodly tight. I realize anticipating a break has been like Waiting For Godot, but I continue to hunt down the best individual short positions, stock by stock – - – the domestic ETFs offer, in my opinion, almost no edge right now.
Given the yet-another-record-high on Chipotle today, I was curious if there were any bears left at all on this (even I’m not crazy enough to short the likes of CMG). Although short interest has declined (understandably), there’s still a pretty stunning amount of victims:
Although the daily magical levitation continues across the equity markets (in spite of the world going to hell in a handbasket), I’d like to meekly point out that the mid-cap index is playing with fire. Take note of recent action, and in particular pay attention to that red support trendline.
Since the end of 2012, the bears have been pathetically weak on every timeframe over hourly. It looked like they might have recovered some mojo on Thursday, but the strong rejection of those lows on Friday, with the close back over both the daily middle band and the 50 hour MA, killed off that impression fairly effectively. While SPX is making lower highs the bears aren’t entirely out of the game, but unless we see the 1952 low taken out, it seems a reasonable assumption that SPX is just consolidating in a range before the next move up. (more…)
There was an interesting comment made to me yesterday that the shooting down of the Malaysian Airlines flight over Ukraine helped the bears considerably, and that’s true, up to a point. It is something I have noticed regularly before at big inflection points, and it’s obviously not the case that the patterns can somehow see into the future. I think there is a relationship there but logically it must be that if there is a strong bear setup like this, then the right news trigger will set the ball rolling with an apparent reaction to the news that is disproportionately larger than the reaction you might see to similar news at other times. We’ve all seen the markets shrug off bad news many times before, but when there are decent bear setups in play the market is showing a willingness to reverse that any bad news can then set strongly in motion.
Obviously the investigation into the extent that Moscow was responsible for this very avoidable tragedy is just getting started, and we may well see more geopolitical shockwaves from this in current days, though it’s important to keep this in proportion. No war is likely to start due to this tragedy, and it’s even possible that it may act as a catalyst to end the current Russian insurgency in Ukraine. (more…)
Today was interesting, to say the least, and for wholly unexpected reasons. I loudly touted RSX (the Russian stock ETF) earlier this week on TastyTrade as the most compelling country ETF to short; little did I know it would crater today. More broadly interesting, of course, is what happened with the ES.
When I woke up this morning, I was pleased to see the ES down about 7 points. At the magenta tint, I figured the day would be all about “managing winners”. The market opened, and my portfolio sported a handsome profit. (more…)
SPX just missed hitting the daily upper band yesterday and has retraced hard overnight. The daily middle band is at 1967 now and if that can be broken then the obvious target is the daily lower band, currently at 1949, with a likely hit tomorrow or Monday. SPX daily chart: