We have some major technical problems. Swing traders may initiate scaled-in short positions with more favorable risk/reward this week. I mentioned in a previous post that the market was flagging with a bias to the downside. I also mentioned that the market was churning either at (COMP) or below (SPX) the 50-day MA which was "technically extremely bearish". This is the end result. I refused to take any 3-day weekend risk, so I was unable to bask in this glory with the short sellers.
The biggest danger to shorts is if the market decides to bounce off the lower bollinger band's range (797.30) like it did back in mid-January. The safest entries would be to short on the initial breakdowns of any rallies from here and to scale-in positions. Unfortunately for bulls, the only things that kept the market propped up were gov't statements, rumors from Charlie, banking CEOs buying up their own worthless stock, etc. There is no substance in these sorts of things, you know, when the entire world is about to blow up. The fundamentals are so shitty that even a technician pays attention.
Although volume was a bit weak today, if/when we get additional down days, the volume should increase and the candles O-C ranges should get larger. I want to see a real sell off and a lot of intra-day activity. I can't tell you how bored I am these days watching the lack of trading taking place. I know you're bored out of your mind too. What do I expect? A healthy environment for short-side swing traders to initiate positions this entire week. The BKX (Bank Index) is at an ALL-TIME low and about to get even lower. The financials are the biggest money makers.
Keep a close eye on Eastern Europe and other emerging markets. Some of these countries are in serious danger of defaulting. We are also on the brink of economic disaster. If shit hits the fan, I will purchase a dairy flat in New Zealand. In the very end, we will all be bartering goods and services anyway. I hope I'm kidding.
Stop the bailouts - Sign the petition.
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