The Good and The Bad

Let's start with the good news:
  • Rydex traders finally added to their short positions in a meaningful way yesterday. Last week we saw them back off their longs and now they are adding to their shorts. There is still some room before their shorting reaches an extreme but we are slowly getting there.
  • We saw a lot of put buying yesterday.
  • Panic was finally evident.
The bad news is that:
  • The maximum oversold reading from early this week is no longer buffeting the market.
  • The sentiment indicators are not yet at extremes.
  • The intermediate term indicators still have room on the downside.
  • If the news from Europe is bad enough nothing will matter. 
That said the S&P futures are currently trading down 8 points and while we will likely head lower we should see some bounces along the way. I believe averaging into a position starting now will show a profit once the next bounce arrives. 

No comments: