Monday, June 11, 2012

How's It Look? 6/11/2012

So, has the rain (pain?) in Spain gone away? Or is the cloud just blowing over to any of the other Euro countries? Was Cramer's "Market in Turmoil" special the defining point of the bottom, or just a way station on the way to more painful levels? The sentiment of the stream and the media swings from extreme to extreme so quickly it brings to mind what a monkey on crack would look like, and rightfully so. We go from the financial system as we know it being on the precipice again, to a country being rescued again. Then we realize there are more leaks in the boat and wonder whether there is enough cash in the world to plug all the leaks. Hell even Goldman Sachs, those amazing traders who only lose money one day per quarter can't get it right, bullish at over 1400, bearish as we cross below 1300 and bullish again over 1325. Are they on the monkey's pipe too?
The big gains that appeared last night have melted away as the morning bleeds toward the opening. What had been a 20 point pop is only 4.5 as I write. I looked at the charts trying to find reasons to believe, but unfortunately a few things keep nagging me. The wave count and I use this only as a framework and keep in mind how many times before I have seen bullish morph into bearish and vice versa, still looks negative. Five waves down looks clearer to me than anything else.

 That combined with the VIX chart, which tells me there is more fear to come has me skeptical of the current rally. Not skeptical enough to make a stand and shout I am right and I will eat your heart out as you grovel before me. I'll leave those types of post to the newer traders around. I know that the elation that comes out of being right like that is nothing compared to the pain of being wrong in those situations, been there done that. No, I've always favored a buy rumor, sell the fact attitude, but I don't ignore the things that contradict any opinion anymore.

This brings me to AAPL, the most important stock of the last few years. it looks pretty good, Elliott, 5 waves up, 3 waves down complete, inverted head & shoulders pattern with the neckline about to be broken to the upside, volume decline on each of the selloffs. AAPL looks ready to reassert its leadership, and that would be VERY bullish for the market.
My thesis is, don't chase. If you're long coming in today, I'd take some off into strength. We are straight up, so sell a piece, hope you’re wrong and keep your finger on the trigger with the rest in case you're right. Best scenario, we go sideways for a few days, create some new setups and the macro news items stay benign. Trade em well!

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