Friday, December 19, 2008

Double Top in S&P; Dec. 19, 2008

Very tough tough couple weeks analyzing this market. With failures to push higher to my 950 target in the S&P in a timely manner and the momentum indicators trying to turn down, the VIX falling on complacency, and now the above double top formation in the S&P, it starts to beg the question if the market is getting ready to roll over very soon.

Breadth is strong and the Nasdaqs are still outperforming the blue chip indices so I'm not diving in fully short yet. But I'm not sure being long now is a good idea. It's options expiration day today and that brings about large volatility at the open and close of the markets. With the VIX in complacent mode, breadth strong, and the Nasdaqs very strong, I'm going to make an educated guess that the volatility later today at the close will be to the upside. I will exit half my long position on an S&P break of 877 and exit fully on a break of 850, but probably sooner.

With that said, if we get a huge rally today, I will use that as an opportunity to close most or all of my long positions and to start establishing short positions. Keep in mind it's possible we could see the market float higher during the holdays towards 1000, so I will apply position sizes accordingly. But the way I see the market now, a big rally today is an opportunity to take profits on long positions and start getting short.


Michael K. said...

Good Ideal, I will sell all my long close to the closing time or when the S&P get closer to the nasdaq 100 with the ^VIX falling fast and I will buy FAZ with half of my portfolio, saved the other half to see if the S&P will go up more leading to Christmas, and buy the rest of FAZ if the S&P drop below 870. :)

Michael K. said...

I think I am just going to sell everything when the market open first thing Monday

Todd S said...

The market is all over the place with no clear trend. I'm putting stops in at comfortable losses and I'll let the market take me out of my postion so I have no regrets.

Michael K. said...

I just Santa will bring me a gift, which is for the market going up til Christmas. Have a nice weekend, I got to go finish up my last term paper which is due in a few hour.

Michael K. said...

Good Morning,
Market should be opening a bit higher today.