Wednesday, September 22, 2010

A bullish day but.....

Though all the major indices closed down for the day, I still think today was bullish. Consolidation is but natural, and in fact, should be welcome if you are bullish after the run up we have had. And as I pointed out in the intraday post, the major support levels were well defended by the bulls. As I had posted the index charts in the earlier post, and the markets didn't change much since, I won't post these charts again. Here is the link to the earlier post.

Let's focus on something else. Financials. As I have been saying for the past two days, I am of the opinions the markets will have a hard time continuing with its run up as long as the financials continue to lag. They continue to drag the markets down and today was no different. The financials ETF chart - XLF - doesn't look bullish by any stretch and MA(200) continues to be a tough nut to crack. For the market to move substantially higher from here, financials will have to move out of the multi-month trading range shown below.

Personally speaking, I got out of VXX at 17 for 3.15% gain. I got into GSM at 13.35 and LVS at 32.69. The latter was impressive today but I got in only after the breakout. This wasn't on my watchlist but I was alerted about the breakout by @TheArmoTrader on Twitter. I liked what I saw - the breakout was on good volume and the pulllback on low volume - so, I decided to step in. My strategy here is to look for quick profits and not get too greedy, at least not until the financials start performing.

I will be back later with Chart of the Day.

Take care and good luck!


Anonymous said...

you are dead wrong.

Anonymous said...

I understand your points but they fact the dollar was destroyed and the PD's pumped more money into the market yet the close was red leads me to believe the market is weak. However, if the dollar falls .01 everyday and POMO is never ending....well I guess that is bullish.

positiontrader said...

You didn't mention why or even where I was wrong, but generally speaking, I have no problem in being wrong :). I play the odds as I see them and that's pretty much all there is it to it.

Anon 2, I would describe my outlook here as cautiously bullish. The charts look bullish but the weakness in financials makes me cautious. It all depends on the major levels for me.

Thanks for the comments. Good Luck!

Anonymous said...

I think as long as banks need to deleverage we won't see the levels in financials as we say pre-crisis. I don't think we need financials for this market to move higher. Technology and innovation will become much more important in the 21st century than financial institutions pushing them higher. Just my two cents. Appreciate anybody's opinion.