Well, charts don't lie, and I'm afraid they're looking more bullish all the time. I've mitigated the damage with some big energy longs. It's pretty interesting that the GDP would come in on the low end and everyone would be celebrating. I guess it's inevitable that Q2 to Q1 comparisons for 2009, when they ultimately come out, will be very favorable. In any event, if the FOMC pushes the bulls into a follow-through above 880, it's all over for the bears for now.
Slope of Hope Blog Posts
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Energy Breakout
I'm really liking my long positions on energy these days. OIH and USO are my favorites.
I'm using a stop of 87.84 on my OIH long.
Gee DP
Well, the release of the GDP came out, and for the bulls, it was probably anti-climactic. The /ES had been pretty firm all night, and a surprising GDP ("surprise" being an utterly subjective term) might have sent the /ES into the stratosphere. Instead, it just sort of let the air out of the balloon.
As of this writing (the GDP was released 7 minutes ago), the /ES is still up, but by 8 points instead of the 12 it was up earlier. So for the moment it would seem that there isn't any kind of GDP shock that would throw things big in either direction. I imagine it will be a pretty dry market between now and the FOMC announcement at 2:15 EST.
My biggest cash positions right now are long DBC, long USO, long OIH, and short GLD plus GDX. I have no big general equity positions in the market of any kind right now, since today is a big slice of uncertainty a la mode.
For the immediate moment, it's back to Mrs. Bear.
A Little Knight Music
OK, here is the final time I'll ever mention my "alternate fund" survey for accredited investors that would have a potential interest in a technical analysis-based investment fund. So I won't mention it again. Promise. See, now we're done 🙂
Given the mountain of events that are going to happen Wednesday, I don't see much point prognosticating until the GDP is released before the opening bell. In the meantime, I'd encourage you to enjoy something I've shared once before – – the absolutely magnificent Brahms Concerto in D Major, featuring soloist Gidon Kremert and conducted by Leonard Bernstein. Stupendous!
Meat Market
Allow me to try to articulate how this market feels different to me. And let's use a little analogy in which I am a hunter searching for meat. Being a lazy hunter, let's say I'm looking for meat that's already been packaged to take home!
Last autumn, I felt like I had been let into the butcher's aisle at the biggest, newest Whole Foods in the country. I could take whatever I wanted. It was easy. And the only frustration I felt was that, on the way in, I had picked up a shopping basket instead of a big cart, since I could have picked up so much more.
These days, the feeling I have is that – – just before going into the same story, my pockets have been stuffed with pork chops, tri-tip steaks, and hot links, and there are about 75 ravenous hyenas running around inside Whole Foods. I run screaming down the meat aisle, trying to defend myself, trying to keep my own meat from being stolen, and I wind up, breathless, just outside the Exit, having grabbed a single Vienna sausage with some of the gelatinous goo still clinging to it.
And that's certainly what today felt like! Trading a market like this is a huge, huge, huge – – and I'll say it again – – huge amount of work, and the payoff these days is meager.
I will offer a couple of encouraging charts, however. First, there's this one of the /ES since the bottom in March.
I see a real shift going on. the green area was where the bulls were in control. No ifs, ands, or butts. It was their market.
The teal area – – in spite of generally rising – – shows an area of uncertainty and, I think, shift of control. An entire week went by, but no new highs were made.
And then we have the past couple of days. Ever so subtly, the market is moving down. Let's take a closer look.
Today's attempt to surge higher kissed that downward trendline to the penny and then immediately changed direction.
If the bulls can get the /ES above 872, then the bears are, for the time being, completely hosed. I could see the bulls taking the market another 75 points higher from that level without breaking a sweat. If we break 823 on the downside, though, I think 780 is almost a foregone conclusion.
Tomorrow is FOMC day, which means that an additional 425 hyenas will be escorted into Whole Foods before we have to go into the place. I am not looking forward to it.
