Closer to the TOP

Today we’re pretty close to the TOP of this US Stock Market Rally that started in Mar 2009.
This rally had many factors and themes:
- Short covering and, ban on “Nake Shorting”, relaxing Mark-2-Market.
- “Better than expectedly worse ” nos. on various fronts.
- Money sitting on side lines pilling in towards late stage of the rally.

Since the corprate revenue nos., neither GDP, nor any economic no. are in +ve territoty (but mostly +ve than expected worse levels), reality is going to sink in.
Till then this rally might just be short of capitulation on upside.

Very soon, the negative surprises are going to kill, this technical overbough situation. Another week or so, I think.

Let’s enjoy the game.

Upside : Possibly One or Two more UP days left

The 9~10% correction that started after July 2nd, got quickly over within a week and upside started on July 9th.. Luckily this time I played downside and upside with almost perfect precision.

The Upside might be another day left..

There are signs of gradual accumulation happening on various strong stocks.. (not in general yet), but we need to see how that works out when indices hit their key resistance points of S&P500 : 1000 NASDAQ : 1950. Till then we’ll exit out of this ongoing upside, over next few trading days. PLus this was an options expiration week so upside was expected.

With : “Possibly One or Two more days” I mean these days could be any day of the next week and not necessarily Monday/Tuesday.

Is the correction Over ? – May be !!

The anticipated 10~15% correction on US charts, may pause here or may terminate around here. The correction may be over here (if markets are slated to be range bound) or may not be over (if something big bad stuff is cooking in the background).

But, for considering the rate of downward change in last 4~5 days I am covering my double inverse (short) positions i.e. selling QID,SDS, SKF, SRS. Selling only 1/2 of my DUG, as I expect Energy related vehicles may correct some more as they led this correction for last 3~4 days) and OIL may correct some more due to further $ strength.

I am not “YET” initiating large long positions. I will add into long positions once ‘full correction is over’ symptoms show up. There is always a time-gap between downside getting over vs. upside getting started. Till then, it’s a wait and watch.

Enjoying the game.

The much anticipated down cycles has started

Thoughts from market analysis on Wednesday (Jul 1st-2009):

The market correction that I had been anticipating for since a month or so now and had been preparing for.. I think has started now.. 2~3 weeks back VIX action kind of indiacted that it may start soon but market levels weren’t there as yet.

But now when I look at VIX, VXN, VXO, etc. and other market sentiment indicators, technical indicators, Various resistance levels on indices charts, I kind of feel strongly that the correction of 10~15% has started now.. or will start anytime from now (within next 1~2 weeks).

I have some positions in QID, SDS, SKF, SRS, URE, and covered positions in INTC, BAC.

This has further created opportunities to short
- US indices,
- also to speculate on major downside in US financial Houses, who esp. may be vulnerable to deleveraging related to consumer finance defaults and reduced payments.
- Overblown commodity leveraged funds.
- (A friend adds) Some overblown emerging market stocks that had rose too much, too fast in last 3 months (which in my mind was more of a pump and dump action by latge investment houses, and sold to common man as hope of quick upcoming recovery).

Enjoy the downhill game.