Thursday, December 22, 2011

The Long and Short of It

I hope you are all getting ready for the Christmas weekend! I am going to have some company coming soon so just a few quick notes.

The Long and Short of It
I could run through more charts and all that, but we have been looking at the same things for a while. Today was an important day I believe, and any confirmation to the upside will be very constructive going forward. That said, markets are at key inflection points that have proven difficult for some time.

The Pros:
-S&P 500 close over 1230 this week
-S&P 500 close over 1250 today
-Headline danger has abated from Europe
-Low volume implies lack of selling pressure going forward

The Cons:
-S&P 500 at key resistance level
-Low volume could cause run up to rapidly deflate should volume return
-Overall bullish sentiment surge last two days

As I planned, I took a full position in TZA (3X bear fund) when the S&P 500 hit 1250 this morning for the second time. I am flat on the position even as the S&P closed at 1254. This is a pure overbought short term play, nothing more. Overall I am constructive on this market and more upside confirmation going forward will mean it's time to be playing the long side.

Have a good night.


GawainsGhost said...

Interesting. But at this time of year I would only invest in Amazon. com. Since I'm not an investor, I guess that doesn't mean anything.

For Friday Night Entertainment, I recommend The Band, "Don't Do It."

They're from Canada, you know. Got their start playing behind Bob Dylan, then went out on their own. Their greatest hits collection is one of the best.

farmland investor said...

This is absolutely a trader's market, nothing more, and one still needs to be careful. Whatever the headlines may be, the entire banking system is a blow-up just waiting to happen. Be catious, and don't get on the wrong side of a trade!