Tuesday, October 20, 2009

SPY: short with stops set

Alright, I'm officially short this beast that won't die. Granted this is a high risk set-up, but I'm in. Buy-stop is $109.70 which voids the head and shoulders top. Some financials are ripe for a fall, too. (See the next blog post.)

Now the meme will be when the Fed is going to raise the rates. Whether the spigot is actually turned off is immaterial, it's the fear of tightening that can fracture this pattern here. At some point the dollar will need to be defended and it is showing a somewhat reliable bottoming pattern with some decent sentiment indicators as well.

Sure, AAPL and TXN blow the doors off their quarters and we have a little "profit-taking." This can definitely continue to climb from here, but I think the risk/reward here warrants going short with a buy-stop.

One caveat: while I think the market is a bit vulnerable here, I still don't see a wholesale sale of the market here. There are enough support levels and sideline money for some buyers to come in along a subtle downward trajectory.

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