Market Fragments:
The next leg up is in progress. New 52 week highs for the major indices are now likely. Don't ask why; it doesn't make sense from a fundamental point of view. But the only point of view that matters is what the market says. And the Market is saying, in case you haven't noticed, that everything is rosy and beautiful in spite of a slowing economy. The consumer will be fine and the Fed is the God of Finance. I am not speaking from my point of view. I am merely conveying what the market is saying. As long as the Fed bails out the lending institutions, Wall Street couldn't care less about Joe 6 Pack consumer. Investing/Trading is not for bleeding heart liberals. (I'm an eclectic philosophical transcendentalist or free spirit). Keep the emotions out of trading decisions and just look at the market.
The line in the sand is 1290 on the S@P 500 cash. That is where support was found on Monday. A close beneath that level of support represents a bearish signal.
Yesterday, I covered my Midcap short for a 2% loss (around 11:30 am EST) and went long QLD and SMH around noon time EST. Very nice so far, although I'm expecting consolidation over the next couple of days. I also covered about 1/3 of my ^RUT short. That hurt for a moment; but that's life. Each day is a new moon.
The Nasdaq 100 and SMH have been the leaders of the current advance. That's why I took positions in them.
My only advice to those who like to sell short the major indices is look at the bond market. At this point in time (short term), Bond market weakness is an omen for stock market weakness. If Bonds remain in a bullish condition, the stock market will rally. Just Witness what took place yesterday afternoon. It sure don't take much to turn the trend back to being bullish. Everything can be rationalized to suit that purpose. The moral here is take your time turning bearish. But be quick turning bullish.
When new 52 week highs on the major indices are hit, the market will become vulnerable. For now, as long as 1290 holds, the coast looks clear till the second week/middle of October. The Elliot people refer to this as a wave 5 advance. I'm expecting some bond market weakness by the second/third week of October which will translate into a nice stock market decline, similar to what took place in May/June. But I will wait for the bond market weakness before shorting. The stock market low should be a higher low. Then we should be off to the races for about 6 months. I expect Gold and Oil to recover nicely. Gold is in a major league Bull Market, which will bring it to new all time highs. Don't believe in the media hype that the bull market in Gold or commodities is over. That is so far from the truth, it is not funny. But it is still too early to buy. Step aside here. Let it bottom.
Swing Trading is where it's at in this market, which is similar to 1994.
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