The market may have put in a short term top yesterday. I day maybe because this market will make you look stupid on a daily basis. Just when you think you have figured out a direction, it goes the other way.
Yesterday however somethings took place that gives me good reason to think we may have started correction that will take us to 1280-1300 range.
#1-The Apple reversal yesterday was telling. If you read last nights post you will see my thinking on APPL. It clearly put in a short term top on monster volume.
#2-As a result of the AAPL decline, the NDX (Nasdaq Top 100) took a hit and it did so right at the round number of 2600. NDX, as well as the QQQ look like tops were put in on a short term basis.
#3- The transportation index is very important to the bullish case and it is failing miserably. IYT is the etf for the transports and if you look at the daily chart you will see what I mean.
#4- The euro looks vulnerable again, and if the weakness gains momemtum, this will cause a rise in the dollar which is a difficult hurdle for stock gains. I may even reshort FXE today and I will let you know if I do. Greece and Europe have become a comedy again and I think its just a matter of time before Greece defaults. It”s just a matter of whether it will be an orderly or disorderly default.
#5-I hate the rating agencies, but they are warning that Goldman, Morgan Stanley , JPM and others may be downgraded 3 notches. Optically that isn’t good, even though Moody’s is a disgrace and couldn’t make a good prediction with tomorrow’s newspaper.
If you were on the chat room yesterday you know that I added some more SQQQ and SPXU. I averaged down on TVIX earlier in the week and although that etf is volatile, I think it could tag 26-27.
I am looking at a lot of charts for set ups. GOOG appears to look like a short here. I mentioned this on the chat room about 5 points higher a couple of day ago, but if things get messy it could see a target in the 570 level.
If you remember we shorted CSH a month or so ago at 44 and covered around 40. It’s back to a good short zone again, so keep it on your radar.
Have a great day and I will keep you posted via email and on the chat.