Wednesday, July 15, 2009

A Chart a Day #6: The S&P 500

As I pointed out a few weeks ago, the market is acting very bullish. The S&P 500 repeatedly has found support at it's 200 dma, albeit a declining moving average. None of us beleived that the market could really form a v-bottom, but hell, there it is. Plain as day! The short and intermediate terms are clearly bullish and you could make a strong argument that a new bull market has begun (in the long term). I won't do that, because the notion is absurd to me, but I could after the S&P breaks 956, without much difficulty. Today was obviously a strong day, with all the major moving averages up about 3%. This confirms my suspician that the S&P will make a run for 1000 or more. Take a look at the stochastics and CCI, they look almost identical to how they did just after the March lows.

So am I long? Do I want to be long? No. But I am licking my chops for a tremendous opportuntiy to sell into strength soon. The biggest moves for a trend tend to be at the begining and end. Thats because most trends begin and end with capitulation, which I'll loosely define as an extreme movement in price acompanied by a surge in volume. I am looking for those valiant shorts who held true to capitulate, along with all those sorry bastards who have been too scared to get long but wanted to. They'll all buy at some point surging the indexes and the volume too. Thats when I want to get short, and stay short for a while. I don't have a crystal ball or anything, but I have a feeling that it will be obvious when the time is right. Don't be trigger happy and may the force be with you.

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