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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Wednesday, October 12, 2011

Stock Market -- Short Term Technical

The stock market remains basically unstable. It is trading in a deep staccato pattern where active
traders often find themselves extemporizing as they go along to stay profitably in the game. The SPX
has rallied as expected from a deep oversold position (Scroll down to 10/3 post for more on that),
and closed trading today at a 3.3% premium to the 25 day m/a. Since Aug., traders have been using
+2-3% readings on the 25 day oscillator to begin selling down positions. In fact, there was some
profit taking late today as the market touched rough short term resistance. In this kind of exceedingly
choppy market, it is sometimes worthwhile to watch the standard momentum measure stochastic
indicator to spot quick changes of direction. $SPX Chart  You can see on the chart that when fast
(black) breaks slow (red), direction has changed.

For long side players who are not day or swing trading, it might be best to see the market take out resistance at 1220 and look for pullbacks thereafter which take the trend of the advance down from
moonshot moves to a more sensible trajectory. That would indicate that stability was returning
to the market. There is no such evidence now and it is flat easy to get whipsawed.

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