It was a pretty interesting day on the market, which seems unusual given the Dow's anemic 9 point rise. But underneath that apparent inactivity was a true softening in the energy-related equities on which I hold puts, gold, and China.
The day started off with over 1,000 points knocked off the Shanghai index and the GLOBEX down sharply. The Amex China Index fell nearly 3%, nicely penetrated its Fibonacci fan line. This represents an important decision point for the medium-term. More weakness tomorrow would usher in a much greater swoon.
We've been watching Lehman and its relationship to the fib fans; it cracked through today. Is this going to be the next Bear Stearns?
The other big thing in the background was crude's weakening in price, driven principally by the strength in the U.S. dollar. Of course a "low" price for crude and a "strong" dollar are very relative terms.
To witness how the US Dollar has been getting its mojo back, look at its relationship to the New Zealand Kiwi over the past couple of months.
Over the past couple of days, NASDAQ (and technology) have been weak relative to the Dow. Notice how the $MSH is backing away from its resistance line.
And, much more close-up, look at how the prices are playing off the former support. A bearish engulfing pattern tomorrow (Wednesday) would work very well against recent action. A push above 2,000 would diminish my bearishness here.
I've still got my AEM and ABX gold shorts, which did well today. There seems to be a pretty large distribution pattern taking place on the $XAU, spanning nine months now.
My one index put, $SPX, had a decent day. I trimmed back a little on this early in the day, when the market was much weaker, but I've still got a pretty good-sized position here.
I nibbled at some ANR puts today; this stock is simply hyperbolic.
A more clean-cut put position is R, which had a nice increase in volume on today's weakness.
Most of my puts are energy-related. A couple of good examples are Apache…..
…….and Devon Energy……..
Wednesday is pretty quiet on the economic news front, whereas Thursday features retail sales (8:30 EST), and Friday has the CPI numbers (8:30 EST). Thanks, as always, for swinging by!
