So dear readers, down 9 days out of the past 10 in the S&P with the one barely green day being a doji. All that does in my point of view is increase the odds of a short term bounce in the near future. The regular readers of this blog might correctly point out that I fancied the chances of a bounce heading into today too. Indeed I did. But as we all know the market works on probabilities, not certainties. And I like the chances of a bounce on Monday even more. In fact, to put my money where my mouth is, I took a position in GMXR at 6.60 today.
It being Friday I will leave you readers right here but I will be back this weekend looking at some broad market indicators to see how oversold we are and also if there are any positive divergences developing out there. And talking about down, down, down .......
Have a great fourth of July in the company of your loved ones!
2 comments:
hey Mr Position trader...may I ask what do you really believe drives the markets??? fundamentals or technicals??? If you look at the SPX weekly chart we slammed into the 200 and 300ma's just as the European "mess" was unfolding...We still don't know how bad things are here, hopefully these stress tests will clear that matter up...we are again sitting right on top of the 100ma just as we were at the end of january before we rallied into the above metioned ma's...have a look also at the monthly...I know the "pullback" has been fairly rapid but the 20ma is just starting to turn up nicely and although I never put 100% trust on ma's it could also offer good support...we also slammed into the 50ma on the monthly!!! is this all coincidence??? I don't think so...I'm going long until we break the 100ma on the weekly, which will also be the 20ma on the monthly...
Thanks for the comment David! You raise some excellent points. Let me try and respond to all of them.
What drives the markets? I believe its fundamentals in the long term and technicals in the short term. I choose trading in the short term using techincals as I would rather trust charts rather than companies cooking their books or using novel accounting methods. Not saying most companies do that, but those that do, you come to know after the event and after losing money.
On the Europe situation, I have written here often that it was the mess in Europe that got us down and we won't make new highs until the market can believe that things are seriously improving there. Just my opinions. And yes, news certainly drives the markets but its important to not judge the news by its contents but by the market reaction to the news.
I looked at the charts pointed by you. Nice catch there! Coupled with the fact that we have been down almost 10 consecutive days, I like the odds of going long here.
On moving averages, I personally believe they just dont work the way they used to. Couple of reasons for this, though I won't go into them in detail here: (a) More and more people playing these averages. (b) Computer algorithms.
Thanks for sharing your astute observations and thanks for reading!
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