I have taken the afternoon to knock out some much needed ‘home owner’ tasks. Since I’m about to get hit with the 2014 Poler Vortex I’m preparing in advance. While weathering an outside door, spackling some dry wall and other ridiculous odds and ends I’m watching CNBC, which I never do unless of course I’m making an appearance and need to brush up on the current media view. The excitement surrounding today’s move is rightfully being muted due to Visa’s position in the Dow accounting for a majority of the Dow’s gains. What’s not being talked about however is the decimation taking place in the Oil space, the man-handling in Semis and lest we forget, the Fed’s slush fund shutting down.
Today’s rally looks, feels and smells like a suckers play. Take the opportunity to raise cash. If you’re feeling ‘cheeky’ throw on some index shorts but whatever you do be careful of the Kool-Aid. This rally is a Sucker’s Move!
I’m beyond curious to see how this plays out. We now have the end of QE upon us, a broad market top in the weekly Russell 2000, flattening 50 and 200 week moving averages and a V-shape reversal. All the classic makings of a kiss and possible resumption of a new trend. But will it happen? Since the market bottom in 2009 we’ve had what seems like 18-million false signals to mark a top. We had the early head and shoulders in 2009 that was talked about in the mainstream more than any technical pattern I’ve ever heard discussed. We had a Hindenberg omen we had the Gartley reversal, you name it, we’ve had it and guess what, not a single one marked a top.
Now here we sit wedging into overhead resistance on the following day of the Fed turning off the flow of dough. We have Oil, Silver, Gold and other commodes careening lower and the dollar in a strong uptrend. It’s almost too obvious that lower prices should come into play and that’s probably why we’re not yet seeing them.
I”ve beefed up my IWM short a bit and added some S&P shorts to go with it. I may have to scramble and cover but I’m going to stick with it for now. In passive managed accounts where I don’t ever short, I’ve been raising cash. I can always put it back to work.
Short IWM, S&P
Despite the strong move of late in the Small Caps (IWM) the index is just now kissing the underside of a flattening 20 and 50 period moving average. The time to short if you’re looking to do so is now. I have started a Small Cap short in this area. My stop will be when the weekly has overtaken and is clearly going to stay above the 50 week MA.Read More