Thursday, December 08, 2011

200 SMA wall

We posted this chart yesterday showing the few times we’ve been above the 200sma on the $SPY since the August sell-off.   To be exact we were above it for 2 days on Oct 27-28 before reversing, then one day above on Nov 8 before again reversing,  and yesterday we closed above the 200SMA for the fourth time since the summer sell-off.   If the bulls can manage additional closes above it in the near term ( we’re a point below it  right now) then it likely will shift the sentiment away from  the current “sell-strength” environment.
The most bullish scenario for us is for the market to flat-line and base near the 200SMA and then break through which is exactly what has been missing from previous break-out levels is the base — we’ve approached it every time from exhausted V -moves.     Churn baby churn, indeed.
On the bearish side of the argument,  the 200sma is a wall until it isn’t, the Euro ($6E_F ) acts like death, and silver/gold can’t find any traction.
The recent randomness of news/rumors has diminished the edge for our type of trading strategy and  as we’ve posted on the stream — we’ve pulled back  from being active in this tape.     We’re ok with giving back on trades that simply did not work, but we’re not ok with getting chopped up in a tape that offers no good set-ups for our strategy.        All that being said, things can change in a heartbeat and it’s still important to stay involved and watch price-action, looking for hints of change.