The Market Puzzle

Last night we closed just above a bunch of support levels. Breaking them this morning would have led to a really good shakeout and I was looking forward to buying into such a shakeout. So what does the market do? Gap up. I will not consider getting short at this point because we are very oversold and the cost of being wrong is high. The market does not like to make it easy.

3 comments:

Anonymous said...

Bears were starting to get greedy as evidenced by your thought process.

So this is a good thing. The mkt should let bears cover their shorts, go up more, and then let them short at higher level.

Although this GDP is probably fudged and there will be a downward revision, psychologically it will be a good thing for corporations who will probably expect greater demand and hence hiring.

Chaos! said...

McCleland Ossilator says weakness can be bought here. Overdone on the down side. This one worked even in 2008.
Don't chase them though!

PJ said...

Anon - I'm a former technology company executive and never in my business experience did anyone make hiring or investment decisions based on GDP.

As for the bears getting greedy - aren't we all? Bulls are greedy too.

As I said last night, I think this week's high of 1103 is the new topside resistance, and I don't expect the market to spend much time above 1090. We had great news this morning, GDP and more important Chicago PMI, and the market was over 1090 for two hours and now is right back at it. Wouldn't be a shock if a slip below it engenders some selling from scared bulls.

Like Tsachy I was hoping for a selloff today so I could cover some shorts late today to play the bid up in Sunday night futures which has been so reliable for six months. If we stay above 1090, however, I'll sit on my shorts.