Last week was quite painful early in the week. On the futures side I had a number of mental and technical malfunctions which caused me some disappointment. On the options side, my negative delta bias was incorrect. When Monday’s gap took place, my 200 day MA thesis was broken, and I was looking for a way out of unwinding my short positions. I did use the Tuesday pullback to the S&P 200 day MA to exit more than 80% of my delta negative trades. That turned out to be a good move, however I didn’t pick up much long exposure. I am now sitting at 90% cash. It is the most cash I have held in the past 6 months.
A few important happenings from the past week:
- SPX followed the Midcap, Nasdaq, and Russell on breakouts above their 200 day MAs.
- The dollar reversed it’s slide in the near term.
- Treasuries dropped substantially.
I also finished a brief intro video of my business
Here is a “Keeper” from Yellowcard
Fundamentally I can’t stand being long this market. However, technically we broke above significant marks in the short term. I have to be neutral to long, until this market starts to break down. It has faked me out a number of times. I will probably continue to play the market via calendar spreads, and a few limited risk long plays. As a safety net, I will still keep a few bearish August calendars which I have already rolled a few times.
I exited all of my MNX 135p and 142.5c calendars last week for small profits (thank goodness).
And looking at the Nasdaq chart, I would love to see a pullback this week, but I am a buyer. A potential downside target is 1430 (previous breakout), and an upside target of 1551 (Major downtrend and 50% retracement of the bear market move.
Nasdaq – Resistance Target 1551.9, Support Targets 1430.8 and 1396
SPX – Resistance targets 962 and 1053, Support targets 900 and 885
RUT (Russell 2000) – Resistance targets, 538,598 ; Support targets 503, 491
S&P Midcap 400 Resistance targets 600, 660 Support target 561
INDU – “Dow 28+2” Resistance Targets 9030, Support 8630, 8280
So far Harry Dent’s thesis is playing out very well. This rally, including the commodity lead rally with misplaced inflation fears is dead money right. Here is his book The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History
I used the dollar levels to exit my long oil position in the DXO. It was a nice trade in which I bought at 2.55, and sold on Thursday @ 4.57. I will pick it up again when I start seeing some basing in the CA and 6E (euro). I do think we continue rock in the Commodities for awhile. And I really like Nat Gas. I totally blew a trade entry on the UNG on friday. I had my shot to pick it up at 13.45, and again at 13.70. But I didn’t pull the trigger. Oops. But I would like another shot when the currency markets line up for a pop.
Canadian Dollar – Support targets .890 and .860, Resistance targets.9275, 1.1015
I am a bit pissed at myself for not buying off the 200 day MA, EASY pickoff that I totally blew. Last Thursday we had a 50/200day bullish cross. I would like to be a buyer off the recent uptrend line.
Euro – Support targets 1.3752, 1.3622 Resistance targets 1.46. 1.55
I believe we have a little pullback in which we can resume the slide of the dollar, and rise of the Euro.