thoughts for December...

So what's gonna happen in December? while I was right about Monday being a good day (relatively speaking), there is one thing I noticed on the weekly chart that any trader should be aware of. On the SPY weekly chart, there is a heavy band of resistance between 109.6 and 110.4. The one thing that concerns me is that the market tried to penetrate that heavy band of resistance, and was never able to close above that resistance on a weekly basis. The market would usually have started the week bullish rallying to over 111, only to fall back down by the end of the week to below 109.6. Therefore there was never any confirmation break to the upside. The thing that concerns me is that any failed breakout like what we might be currently witnessing on the SPY, would usually lead to a sizable breakdown. Whether this happens remains to be see... we'll have to allow price action to tell us, but I have a feeling with this week's jobs numbers, and the mess that is going on in Dubai, we are quite near to a conclusion as to what the market will do in the short term.

personally i'm still biased towards the upside because I believe the FED will not allow a decline in the markets, but will not allow my bias to make a wrong move... what the FED says, and what they do are two separate things... they have proven themselves willing to destroy the dollar...

all is good - Friday Nov 27.

while the markets did end down on Friday, considering the news about Dubai, the ugly gap down, only for the market to push back, it could be quite possible that the SPY has seen the short term bottom for now after reaching 108.3, which isn't too far from my thoughts of 108 being support... in fact when ugly news can't shake down the market, and in fact the market rallies, I have a feeling the market will continue in the opposite direction (which in this case is up)... The SPY, USO all reclaimed some major support levels, so there is no confirmation of a down move, rather we are sitting on support right now...

looking at the dollar UUP, while it did gap up big time, it just fizzled throughout the day... probably cuz the powers that be want to prop up the stock market... so I still think the dollar has to take out 2008 lows, before we see a significant correction...

edit: sunday nov 29: judging by how gold is reacting up sunday night, and how UAE central bank is coming out pumping the markets, I have a feeling we'll have a good day Monday...

Dubai: there's nothing wrong with not paying your debts...

So Dubai decided that it needs more time to pay their debts, and is closer danger of defaulting... SO WHAT? just flood the market with lots of printed money and all will be solved... after all that is what the US gov't is doing...

So this thing with Dubai is probably going to give us that downdraft that is long overdue... whether it's a significant correction, or just a slight pause or bump in the road remains to be seen... The SPY was trading around 111 which is major resistance... so it makes sense that we're going to see some small downside pressure, to perhaps 107-108... if we go below, then maybe this will be a somewhat significant correction, but not enough to stop a mid term up trend... eg. the US gov't will do all it can to prevent a market meltdown... at the expense of the dollar... I still think we should see 120 on the SPY before we have a major correction, and the dollar has to trade below 2008 lows before a snapback to cause the SPY correction...

gold is going to the moon, however i think that one last major shakeout will be coming that will destroy hope in those who have invested in gold, before the real up move happens... a 10-15% correction would be ideal, and would be a nice time to get long into gold...

critical day Wednesday Nov 25...

USO is sitting on a level of support (38.5) will it break lower? I'll just observe that even with a lower dollar, oil hasn't really been doing that well lately... Is oil telling us something?

SPY is sitting at a rather major level of resistance of 111... will it break higher? Trading on Tuesday is rather uninspiring, and the market is starting to look tired...

the dollar UUP seems to be carving out a base... will it break lower? or will the dollar bulls be able to push the dollar up from above it's base?

and will throw XLF into the picture, since the SPY often depends on the performance of the financials, and right now it seems like the XLF is just coming off the upper descending trendline on the very short term...

so what will happen on Wednesday? while I'm leaning towards a decline for the market because it looks tired, I must say that at this point, anything can happen... and people already have some expectations as to what will happen... you can be certain that if people's expectations of what the market will do is wrong, then the market will typically reverse in a violent way...

so I figure the first 1/2 hour of Wednesday's trading will probably tell us where the market is going for the day... keep in mind that volume will likely be light because of Thanksgiving coming up... judging by what's happening at 5:30am EST, my guess is that we gap up in the market... just observe whether this gap fades or not...

whipfest nov23...

I thought today we were going to breakout above resistance, and prove my thesis that I posted yesterday wrong. As the 10am timeframe rolled around, SPY resistance was tagged, and from then, the market just rolled over... (see that big tail?) That means I still stand by my thesis that we're going to have a small downdraft to 108, unless we somehow are able to clear the 111 resistance tommorow, and confirm it the day after... (somewhat unlikely given today's price action)...

USO looks likes it's ready to hit the lower channel and 50 dma of 38.50. From then maybe we'll have another inflationary rally

The dollar certainly declined, but from trading on the UUP, it looks like this is as low as it will go in the very short term. Ultimately I still think the UUP has to trade to 2008 lows of 21.90, before we have some sort of significant rally in the dollar, and a sizable correction in the SPY.

week of Nov 23 09... continued modest declines

Well for this coming week, I expect modest declines for the SPY... (to 107 - 108 50DMA)... I don't expect a bloodfest. The dollar appears to have caught a small uptrend thus supporting lower stock and commodity prices, but nothing that will stop the larger timeframe downtrend. I don't expect a major market correction to occur, until the UUP trades around the 21.90 - 22 level which is the major low from last year for the dollar. Maybe the SPY will be at 120 at that time... In the meantime, I don't think a dollar rally will exceed 22.60 on the UUP (where the 50 DMA is).

USO can expect to continue it's small downtrend until 38.40 where it should bounce. GLD and SLV are way over extended and ripe for a pullback... when this pullback will occur is anyone's guess... I think GLD is going parabolic upwards for now... any day could yield a nasty correction, but in the meantime, the path of least resistance is up.

pause day ?

Nov 19- if you take a look at the SPY, we had a rather nasty down day, but not as nasty as it could have been, and it's sitting on a support level. Similarly for USO, we're sitting on a support level. While I think we still have a little more of a down draft to come, (108 on the SPY, and 38.4 on the USO), that's about all I can expect for a downmove because this bull does not want to die, and it has the FED on its side... so for the 20th, I expect a pause day, because of an not so steep pullback today, and then a continuation of a bit more of a down move.

since I really don't have time to play shorts, I think I'll wait for a bit more of a pullback before going long. I keep hearing about, "nasty correction coming"... "we're way overbought"... I do agree with that, but somehow I don't think the FED will allow the market to crash right before Christmas shopping season... for now the big boys are just playing games... notice how BAC decided to say today that INTC won't be doing too well? Is it a coincidence that they published some scathing notes on INTC just when the SPY was hitting 111 resistance? Why did they wait until today to say that? And are they really saying something that we don't already know? All that is happening based on my speculation is to shake people out, so that the big boys can scoop shares for cheaper, and sell it back to the little fish who will blindly chase it up higher before they play some more games, to shake people out. The big boys are doing the right thing... buying low and selling high... for this to work, there's got to be dumb money that is willing to buy high and sell low.

small decline in the immediate future?

Didn't have much time to look at stocks lately... but based on today's trading November 17, it looks like the SPY is hitting along resistance with little will to break through the 111 resistance band. Similarly the dollar appears to have hit support, and is at least ready to rally a bit before a resumption of the downtrend. Combined with the fact that oil is hitting resistance, and gold appears to need to take a breather, it looks probable that we'll have a small decline very shortly. Perhaps tommorow's jobless claims numbers would be an excuse to take some profits... A brief pullback of the SPY to 107 or 108 wouldn't be surprising, as long as trading remains above the ascending yellow trend line.

But definitely in the mid to longer term, there's no stopping this raging bull market... all that printed money sloshing around out there needs a home, and as long as the dollar declines in a controlled fashion, the illusion of a healthy economy can continue. In the even longer term, well we'll leave that to another day... no need to worry about things that may happen a year from now, but if you followed my blog long enough, you know what I think will happen.