This is not last time we have visited 916 on the S&P futures, we will see it atleast once even if we have greatest of numbers tomorrow.
In case if we close below it certainly we are going to 880-5 my final target somewhere around 7600-7800 on the Dow. In such a case naturally it would be prudent to purchase some more Sept OEX puts as far out as 830 or 840's. Tomorrows numbers will nail the direction of correction.
Although no one has mentioned it so far but if 50 days moving average is ever violated it is in my experience a near must that you may see on back of even greatest of numbers a spike up but unevitably we will test 916 before we resume towards higher levels.
I look at PPI and compare it with last month price indexes, commodity prices or wage pressures I dont see any reason to beleive that CPI would give economy inflationary direction. Even retail numbers indicated nothing towards any underlying inflation for me the number if any would give market a much needed shot in the arm. Perhaps it would take the market up to 951 in next few days but it will fail there and come back to test 916 the 50 days moving average. Resumption to higher levels without a revisit to 916-20 on futures is a very unlikely exercise.
Market is under pressure for wrong reasons I don't think that any future sell off will come as a result of 'inflation' it will come due to failure of companies to catch up with the pace of S&P growth, we have fundamental problems and much as I would like to take advantage of these inherent misconceptions to day trade, don't ever lose the sight of the fact that we have structural problems with the cyclical corporates to match envious DOW march forward.
I think some of these techs will present a window of opportunity tomorrow,ask me how?
If the number is bad I think we will take out 916 easy and will see 880 in few days, in such a case we will see great valuations being created. Some of these tech stocks will be great picks in such a downdraft, no one can ever predict the bottom but we can make an effort to come with an educated guess I think for me 7600 is a great place to reenter DOW. The problems with any correction is that it slides beyond it supports 5% and on the resistance shoots up around 5% , so we need to take all these movements with some strength of beleives.
If tomorrows number is non inflationary we will see a major rally in SOXx and after initial mischiefs of the floor brokers to enrich them on the back of some fund managers we may see S&P settling around 947, I will be extremely surprised to see S&P taking out the ex support (20 days MA) now a major resistance, I will be doing injustice to my analysis if I say that I know what is going to happen tomorrow, my model is biased 53/47 towards a positive surprise but at this low score I will only recommend a trade if key supports or resistances are taken out.
I am going into numbers with a slight caution and I decided to hedge my remaining portfolio by selling some Futures reason being that if numbers are good I may lose on my futures but will make it up on my portfolio, I know I will see my level back even in case of euphoric short covering rally however if numbers are bad I wanted some protection.
I know that markets will fall from my 951 resistance and visit my levels before taking a direction to new highs but I erred on side of caution.
I am positive on some of these techs and think that whatever happens you will make some good money on some of these good stocks- up or down- once you establish your position in three months the stocks I have been mentioning are moving higher. Did you notice resiliance of AMAT today and its close.
I wanted to write about how sell programmes hit the markets, if the thread is interested I will write tomorrow. |
