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.

___________________

*UPDATE

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.

Wall of Worry Charts

Now we climb that wall of worry.  The SPX is still below the declining 50 dMA and nobody expects it to make a move past 815 before pulling back.  Was this just short-covering, or will it develop into a real rally?  Shorts are nervous about getting squeezed, longs are nervous about that 815 resistance, cash holders are nervous about missing something.  Game on.

BMC long if it can break through the overhead resistance.  It may have to pull back a bit here, but this charts looks okay if it can break above 30.22

AXP short set up is developing with high volume doji Friday showing the short-covering may be finished.  Look for confirmation Monday with a red hotdog on decent volume, then short the bejesus out of this one.  High end credit cards?  Yeah, right.  These guys are paying customers to pay off their balances... what kind of a business model is that?

TJX is coming off a healthy basing pattern although the breakout is on lousy volume and RSI is now overbought.  Retail should have a little more life in it, but Iwill wait for a pull back to horizontal support before entering a long and keep the sell stop near the trend line.  If this gets above 26.36 it could run.

Sprint (S) long has been strong.  I took 22% gains on Friday with the lower volume, but this baby was strong into the close so it should be interesting to see how it opens Monday.  On any low volume pull back, I'll add to my position.  Above 4.5 the next resistance is 6.5.  Sell-stop is the trend line.

MS long may be one of few survivors in the sector along with GS.  I would be careful entering here, but long term this should do okay.  

Citigroup (C) is still standing despite doing just about everything wrong.  In fact, C had a 78% gain this weak on pretty decent volume.  Sure some was short-covering, but probably some new buyers, too.  Ben Bernanke on 60 minutes said they will not allow any big banks to fail and the leading indicator out of the crisi will be when the big boys start getting private equity.  I'm not buying this smoldering heap of burning tax bailout money, but the chart is interesting.  This could run if it breaks above 2.88, but I'm not holding my breath... I'll just put it on my radar.

In other items, Friday I added to FCX and opened a long position in IBM at 89.50 as discussed last Thursday.  I will add to MS and S on any pullback Monday.