Sunday Brief

Sunday Brief, 22 August 2010

Where there's smoke...1056 is fire
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The week started out great, then ended with a thud. It is what it is, the Bears have been gaining ground in the news and on the blogs, while our governments statistics are backing up their claims. I don't know where sentiment is, but my perception of bearish sentiment is spiking to all time highs. As a result, my expectations for the remainder of the year have been lowered.


On the hourly July rising channel, it's oversold, while Fibonacci is at 50%. In the past I've spoken about 1084 & 1069, and unfortunately we've broken through both those levels. I believe this chart is Neutral with a bearish bias and it wants to test 1056.



The daily channel is priced "on target" while the Mr. Fibonacci is bearish with an impending test of 1060. As Ira says, when you pierce the bottom of a bollinger band, it's not a time to buy, it's a time to take profits by exiting your shorts.



The weekly Fibonacci levels will stay bullish unless we break through 1009. Meanwhile the channel is halfway between "on target" and "oversold." The Bollinger bands are bearish suggesting a test of 1033.



I won't go too much into the monthly chart since the candlestick hasn't closed yet. But I do want to point out one important thing we should be watching for. This could be the third month we've closed below the 50% retracement from the October 2007 Bull market peak.



On the long-term view, it's important to take note of the price difference between the previous bull/bear market. The median price between 1147 to 965 is 1056. Since we are already trading below the 4SMA (yearly average) my personal thoughts are 1056 is a valid line in the sand between the current bull/bear fight.



That's all I have, it's been a stressful week on this forum, so expect me to lay low. I will be looking for an exit this week if it's presented to me.


Take care and trade safe...Jason

 

[Cruzen]

Thanks Jason.
I would like to look for an exit point. Any tips would be appreciated

 

[JTH]

It depends on your current allocation, last entry point, and trading style. For long-term and intermediate folks I think it's a good time to sit on the sidelines. As for me, my goal is simple, I just want to exit higher than my last entry.

 

[Cruzen]

I am currently 40C 30S 30I, I got in using my second IFT on 8/2/10..UGH.....

 

[Cruzen]

Sorry for the broken response.
I think that technical indicators and the upand comming reports will make the market go lower. I would like to think not. I would like to at least get out to break even... What do you think

 

[JTH]

I'd guess you've already taken about a 5% hit. At this moment, the chance of you breaking even for the month is slim if we break through 1056. If 1056 doesn't hold, it's not a bad idea to take 15-25% off the table before the month ends. This will give you more buying power, should we continue down to test 1010. If 1010 doesn't hold then it could get ugly real fast and I'll be staying out of stocks altogether. Bonds have been strong, as long as they hold up, you may want to use a future IFT to hedge against stocks. This way if you have to exit stocks, your F-Fund will help make up the loss. It's a tough spot to be in, just do what works for you, and put in a mental stop. Right now the trend is down, with a well established lower high & low, when the trend changes, I'll be the first to let you know.