Since the market peaked at 1150, we have seen classic “sell the news” reactions to the earnings reports of Intel, Apple, and Cisco. Take a look at this hourly SPX chart (click to enlarge):
The proper course of action all three times was to sell, sell, sell into the euphoria. On Wednesday, the market rallied into the bell in anticipation of Hewlett-Packard’s earnings. If you bought into the euphoria, you didn’t pass the IQ test. In fact, you just might be a clueless newbie who is about to be clubbed like a baby seal.
On the other hand, if the market is able to advance on Thursday, then that might be an indication that we have a change of character where good news is good news again. And that would be a strong hint that we are back in bull mode.
The last two SPY days’ volume is lower than average.
Baby sealsl aren’t clubbed any longer, they’re drowned in oil.
Matt,
Well said. Additionally, we are at a critical level.
SPY was turned back several times at $110.3x today. $110 – $110.6 was resistance several times in late January and early February. As others have noted, we are also at the 50 MA. I will point out that we are also at the 80 day SMA.
I know it sounds odd, but it makes a great fit for support / resistance going all the way back to 9/2008!
SPY bounced off the 80 SMA in 4/09, and the big bounce in 7/09 was with the 80 SMA crossing the 200 SMA.
The ‘golden cross’ (50 & 200) led to a $3 bump over a week followed by a $6 sell off the next. Since the 80 SMA crossed the 200 SMA the SPY stayed above it until 1/22/10, notably bouncing off the 80 SMA in early 11/09.
Also VIX is less than 22, which is within one point from the 2/2/09 smack down.
In anticipation of a break down, I sold my SSO at $37.28 (AH). Hopefully that still looks like a good move tomorrow.
If we break through to the upside I have limit orders to dump SDS and get long SSO again.
GLTA
Just wanted to say that my blog got a makeover and the twitter page is kickin’ it. I plan to resume blog posting at least once a week with all the info I obtain on a weekly basis.
You got your heads up now click on K and let me know if you like the layout. I know i havent posted since last year but shhh.
nite