Tuesday, April 28, 2009
The Swine flu narrative infects talking heads: Update
SPY looks to be range bound but the gap fade this morning is impressive. I keep looking for he bottom to fall out of this thing and it never happens. Resistance is 87.50 or so and it has bumped up against it a few time now, so one of these times it may break through to the upside.
The bounce off the mauve line this morning was abrupt and the action is now constructive. Gap fades like this are nice to catch on the upside and it may develop into an upward trend day. Horizontal support, not depicted on the chart, is 83.5 or 84.
The QQQQ looks even stronger here on a technical standpoint. Software and semis.
CNBC is becoming unwatchable. Everything that happens is "because" of some horseshit news item. I realize they need to earn a paycheck by creating a narrative around something and with swine flu, consumer confidence, Mike Huckman's next "blockbuster drug", Obama's first 100 days, BAC needing more money, etc... today seems like a more target-rich environment than usual.
The swine flu hysteria is ridiculous, and comparing it to the 1918 Spanish flu epidemic borders on insanity*. Folks, this is more bullshit narrative that has no basis in reality. More young people will die this weekend in the US from .38 caliber handguns than will die from swine flu the entire year. Endemic social diseases are more costly by far than viral epidemics.
The strategy now is a combination of long and short swing trades. I've pretty much stoppped the day-trading since it was driving me nuts and not really improving my performance. I'm using Invivoanalytics (thanks Eric, T.Lo and Pete) and also Barry Ritholtz' FusionIQ quant sites for professional opinions and portfolio advice
My theme lately is long semis (MRVL, CY) and software (BMC, maybe I'll add ADBE), APH, FCX for gold and copper, GLD, SLV, DD, NMO, and looking to add TLM (this morning looks like maybe a good opportunity.)
RWF, ARK, GTY and others are in the IRA.
Shorts currently are HRB, TYC, APOL, ALKS and recently added BG. Stops are set on all shorts!!
The move back to swing trading will likely delay any further graying of the hair. I'll try to cover some individual charts if/when I get time.
Bespoke has a great chart on the effect the 1918 Spanish flu had on the stock market. My great-grandfather was a general practitioner in Chicago at that time and the legend is that he would travel the neighborhoods with his holy water as the sole weapon against the viral scourge that killed tens of millions. Despite the utter despair, the market dropped a mere 10% and recovered more quickly than the populace.