by phil - February 2nd, 2010 8:27 am
Too tricky to call!
We're trying to be bullish now, so we don't complain about stick saves and we got a nice one into yesterday's close and another one in the futures, which were down about 50 at 3am – but it still looks like BS to me.
On Thursday morning I said: "Our 5% "must hold levels" remain: Dow 10,165, S&P 1,088, Nas 2,200, NYSE 7,000 and RUT 620 with 3 of 5 below = BAD!" We got the Dow, S&P and the NYSE back over the line yesterday and now we need the Nasdaq and the Russell to show us the money and catch up. Of course, this is just our "averting disaster" levels – we haven't even broken our "weak bounce" targets of: Dow 10,300, S&P 1,105, Nasdaq 2,225, NYSE 7,100 and Russell 625 that the 5% rule predicted in last Monday's post.
Last Wednesday I asked the question, is it weakness or good old fashioned consolidation? My premise was that commodities were overvalued and we were due for some rotational correction, which was GOOD and HEALTHY. The market still has much to prove and we are still pursuing disastrous economic policies that will all end in tears but, in the meantime, we can still party like it's 1999 as long as we know where the nearest exit is – and that's what our Disaster Hedging is all about.
We took positions on DXD and QID yesterday as the weak bounce we got was a good chance to establish new hedges and I'm hoping we get another push in commodities so we can short some of them. EDZ is getting interesting again, back at $5.65, about 10% away from our sweet spot ($5) for taking up a position but we may hit them early if the US indexes can't provide some leadership this week. As you can see from Trader Mike's charts – we have plenty of resistance to get through and we're still waiting to see a rise on anything but weak volume to give us more confidence.
Germany gave our confidence a small boost this morning as Retail Sales, adjusted for inflation and seasonal swings, rose 0.8 percent from November, when they dropped a revised 1.7 percent. Germany’s government this month raised its forecast for 2010 economic growth to 1.4 percent from 1.2…