And the drunken monkey market continues. For the last 6 trading days, the market, and with it sentiment has reversed direction dramatically during each session. Below are the open, high, low & close for the SPY. Up, down, up, down, up, down. And large moves too. The stream has been almost comical. Sunday night there were multiple posts from relatively prominent bloggers that were spitting in the face of the bears, trumpeting how they were going to squash them and their positions on Monday. Really nasty posts. That in itself was a tell that the highs were going to come early. And they did with the biggest fall of the period, almost 3 points from high to low. By Monday night, their silence was deafening!
Early High or Low to Opposite Extreme
This morning, we are basically unchanged, but awaiting Jobless Claims & CPI at 8:30. Will the pattern continue? Where are the clues? Where are the lines in the sand? Well, there are inverted head & shoulder patterns everywhere, so we cal look at the necklines verses trendline where breakdowns turn the H & S's into bear flags. . AAPL's pattern looks relatively complete while SPY looks to need a bit more downside. Bad numbers will make that pattern "look" more complete..... But something just doesn't feel right to me. But while truthfully I want to be a bull, but there is this nagging pull to the bear side that I'm finding hard to ignore. Spanish and Italian yields are heading higher and bond yields & spreads are more important than equity prices. But maybe the real thing that is bothering me is the VIX chart. It doesn't look to me like it is finished going higher. Even during this choppy period, it can't seem to get under 20. Until it does, my finger is on the sell button for my longs, I'll hold some extra puts overnight, be long some gamma and pay whatever decay it costs me to sleep well at night. I plan on going with any moves as opposed to fading them, selling breakdowns and covering quickly if they fail, but trying to let them run if I catch it.
Essentially we've been in a trading range, but with closing prices being on or near the highs or lows, the fear and greed factors seem like they have been on steroids. Until the range is resolved there will be frustration by those who are too opinionated. So don't get too opinionated. Trade small! You don't have to make your millions today; this is a career, not a lottery ticket. If I'm wrong I'll get stopped and reassess. Like the barber said, "Next"! And I can take solace in the fact that I have been wrong before, more a few times actually. But I won't have to head hide my head tomorrow either!