Tuesday, June 16, 2009

Change of Sentiment

We thought that the bulls would try to put up more of a defense today but so far the bears are winning the day.

In last night's newsletter we put in a few support longs (BRCM ATI WLT and a few gold names) but none of them have triggered at this point. We also put in three shorts and all triggered and worked well.

SOHU target trade short to 64

We had wanted OXY and COG to bounce for a day and were surprised how easily they cut through support. OXY was listed as a short at 66

COG short 34

As opposed to previous pull-backs since the March bottom we are now under the 20 SMA on many sectors we follow -- this means that support buying has become more high-risk than in the last few months.

It's only 1:20 PM as we write this and today's close will be important but thus far the message is clear that the market for dip-buyers has changed and more caution is needed.

We still like gold stocks on important daily points as they started the sell-off before the SPX and are quite over-sold.

Update: One support long finally triggered, ATI 38.

Good day for our selections as all selections worked: 2 shorts, 1 target trade, 1 buy on support.

Monday, June 15, 2009

SPX gap filled

SPX gap from May 29 now has been filled and possibly the market will try to stabilize around this number short-term. If it can't then next stop is the 200 SMA/support around 910 and then major support at 880.

Trannies (represented here by the ETF) were holding under 62 resistance and a break-out through that level would have been very bullish. Instead today Trannies pulled away and broke down. This is the most bearish action we've seen in a while and think that the up-side now has been capped. The break-out level on the SPX that was touched on late last week (and which seemed questionable) now seems to be a distant memory.