Not Convinced

{+++} Nice pop overnight.  Let’s see where they open the futures tonight. Too many charts look horrific for me to be real bullish here.

The problem right now is that the market is out of positive catalysts. I have no faith in Washington, either on Syria or the debt ceiling, earnings are out of the way, and the Fed looms large. Making big long bets here I think is financially imprudent, and if I have to stay in cash for a few weeks, well that’s OK.

A 1540 target is definitely doable for the SPX, as that is a 38.2% retracement.  Short term support is at the 1628 and the 1614 level, with resistance at SPX 1636-1640 and SPX 1648-1649. Probably time to get short if those lower support levels break.

I have cash and I’d rather wait for a turn I can believe in. When you think about it, the market gives you maybe five or six times a year to really press your bet and make good cash, that always happens at oversold levels ( or overbought levels if short) and I don’t think we are there yet. I felt like I forced some trades last week and whenever that happens its time to step aside.

There are no takers for stocks like GOOG, IBM, GE, MCD or any of the XLF names. Just brutal. Retail has been murdered, both the specialty names, as well as leaders like Macy’s (M). You could probably take a shot at shorting Kors (KORS) up here with a tight stop overhead.

My negative view doesn’t rule out a countertrend rally (see resistance levels above), but I think for now rallies should be sold. I think that’s what fast money will be doing anyway.

The European markets were solidly lower on the week for a net loss of 3.3%. Six of the eight indices are quite close to confirming downtrends.

The Commodity equity group was also negative on the week for a net loss of 2.6%. Russia is in a confirmed downtrend.

The DJ World index lost 2.2% on the week and is close to a confirmed downtrend. Currently 30% of the world indices are in confirmed downtrends, and 35% more are quite close.

Yes, this could be setting up for a big countertrend rip, and you should watch for that, but right now the short and intermediate trend is down pretty much across the board. My only point is to stay smaller in size and keep stops a little tighter because I don t think we’re at a tradeable bottom for a “sustained” bounce yet.

Real cautious here.

See you in the chat room in the morning.

Previous Post
Labor Day Just Got a Little Better
Next Post
Morning Market Look 9/3/31

Recent Articles