I have a charts in my previous post that focused on GE, that describe our current predicament. The fact is, the markets have broken down, and control has been handed over to the Bears. So, when in Rome, do as the Roman Bears do... uh, are there bears in Rome?
We are very oversold on the 60 minute charts, and thus we can expect a bounce at some point, that should be a source of strength that we can use to short some positions. It will be interesting to see how AAPL behaves at that point. I'm not so sure it will be the best short candidate.
I want to sing this from the rafters, that I believe cash is the best position. I think things are too volatile right now, and there's no safe way to enter into a position quite yet. For those who have psychic ability, I salute you. And I'm sure you'll pat yourself on the back, and sing your genius when trades go your way. I'll be very happy for you.
You want to talk froth, check out the turbulence on this intra day chart of the S&P 500, as of 11:10 AM today (Monday 14th, 2008). 
On the S&P we should look at the following resistance levels on the bounce:
1338, 1341, and 1352 if oversold conditions get strong enough.
It was key that AAPL loss the 150 level, and thus we're in no mans land right now, it will be a struggle to regain that level anytime soon, in my opinion. If we move up there on the bounce, I might recommend shorting. Also, I had GS out as an alert last week, but retracted it, as it lost 170, another key level, so same shorting strategy goes for GS as well.
Don't go overboard with the shorting, eek out your gains on strength, stay light, for those who are a little more squeamish, stay in cash. It's a fine position to be in at this time and you'll do just fine we other less-risky opportunities come our way. Do not think you can time this market right now, I guarantee you will come away with the short end of the stick more often than not.
So, to recap... look for the bounce, take light short positions on that strength as we approach the resistance levels. Buy to cover on weakness. (this is the inverse strategy of buy into strength in a Bull market). STAY LIGHT, CASH IS A POSITION!!!
-zach bass
Monday, April 14, 2008
Market Analysis, and Strategy for Navigating the Froth
Subscribe to:
Post Comments (Atom)
5 comments:
Zach-- have you liquidated your previous positions?
Reader "Y"
I sold a good portion of AAPL selling into strength on April 7. I still hold AG and BRK. AG is a healthy stock, as most in the Agi sector are as well. My total positions are small, as I am mostly in cash, and recommend cash right now until either the Bulls show that all the bad news is already baked in, or capitulate to the Bears will to bring the market down further.
Currently, the markets are in the unenviable position of being oversold (which normally would spur a counter rally), but the Bulls are hog tied and can't move it to the upside because of the constant stream of bad news. So until this struggle is decided, I recommend mostly if not all cash.
-zach bass
Now that Intel has met earnings and Apple most likely will gap up over 150 tomorrow, do you still recommend shorting?
I don't recommend shorting. We have resistance at 150 and 152.55. I did put out a call today on the AAPL Yahoo MB, to cover shorts if we dipped below 146, which we did briefly.
The situation has changed some with INTC positive earnings report, and we still have GOOG, EBAY and others to come. Let's see if the bulls can get some volume selling and if they can penetrate the resistance levels. Today was such a low volume day, there's no read that would change my sideline position for now.
-zach bass
Post a Comment