Wednesday, April 8, 2009
S&P Rally Still Waning, Making Little Progress, Ready to Fall Hard; April 8, 2009
Well I sound like a broken record in saying the S&P is bearish but I call it like I see and I have to take what the market gives me. Right now I see severely waning upside momentum as there's so much hope that this rally will go straight to 1100 without looking back that people are pushing this thing up with everything they have. But hope will not sustain the rally and the momentum and internal breadth indicators support this as they are severely weakening every day. As of today, the S&P is at almost the exact same level it was at March 23, 2009. So in over two weeks, the index has gone nowhere, even though it seems like it's been so bullish during that time. Again, this is the last bullish hope that this market is going up in a straight line and panic buying is taking place because people are petrified in the missing the bottom. But what they should be worried about is buying at a top, which most people are doing right now. The market may drift higher in the coming days to the 850-860 level, but the evidence is overwhelmingly bearish at this point, and any rallies will only be met with further internal weakness that act as a rubberband that will shoot the market down further. I am short and remain short. I'm watching the expanding trendchannel I drew on the 4 hour S&P futures chart above and am watching for a clear break of the lower end of the channel. This will lead to further telling to at least the 760-780 area of congestion. From there I might turn bullish.
I've rolled my April S&P put options over to the May contracts and remain short the S&P and the XLF (financial ETF) also in the May expiration. I feel strongly that the market will correct downward to my target areas before more significant bullish potential is to be considered. So I wait.