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I am seeing some stocks these days which I think are basically doomed, but I’m not going to bother shorting them, mainly because the stocks don’t have much history to go on. Frankly, this is probably a mistake, because these profitless Internet companies have pretty much nothing in terms of price support, and I suspect all three will find themselves in single digits (as Angie’s List already has) in relatively short order.
Well, per my post last week we blew right through the crossroads, and Thursday/Friday big range days reminds me too much like 2008 all over again. As volatility picks up, you must swing on shorter and shorter time frames, and the mistake I made then as a leveraged trader is not getting smaller, faster, and more conservative, immediately. Therefore I am going to get very focused, and focused on volatility.
Money is money, and I am just getting pure. No need to look at a hundred stocks when everything is tied to volatility. I made my most money trading XIV and UVXY puts during these elevated levels in 2011 as intraday moves can give you a weeks worth of profits. There are a couple of trade-able edges in this environment, I have shared in the past, and will again.
Regarding gold, et al. I am staying away as I think we are deflating, and with the Fed ending QE, I don’t see a catalyst, unless gold responds positively to a hedge unwind.
The first thing to say this morning is that short term the bears own the SPX chart until demonstrated otherwise. There are no strong reversal signals here yet and SPX is riding the lower band down, with a very telling hit of the SPX daily lower band from below as resistance at the high on Friday. The lower band is now at 1938 and that may hold again as resistance today. If a bounce clears that resistance, and broken rising wedge support in the same area, then next strong resistance is at the 50 DMA in the 1953 area. SPX daily chart:
Technically, I have my attention on volatility this first week of August. I saw lots of predictions over the weekend of how far down we might go (and many varying levels to watch). I shared on the weekend that I am watching 1082 for the Russell 2000 (the bottom of a double top pattern range). This seems reasonable to hold forth as a pattern-based range. We may test that support level this week (and we may not). I noticed that many missed this chart on the weekend, so I share it again below. I basically see 1082 as a “ledge”. If the Russell 2000 price firmly falls off the ledge, then the range is finally broken and odds are essentially WATCH OUT BELOW, because the markets have not seen trading below 1082 since October 2013.
Russell 2000 Weekly (worth watching for downside leadership)
