the Yuppie Pig

We've had 4 days in a row to the upside. And just like how I must be incrementally more bullish when the market is oversold, I must be more bearish when it is overbought. I'll do a quick re-hash of the "big picture" before moving on to the shorter term trading (60 minute) charts.

Bear market rallies have tended to find major resistance at the 50 day EMA. Right now, that is at 800, and is likely to fall perhaps to 780, coincidentally meeting the averages if it were to continue to push up over time. At an absolute minimum, I would expect some type of corrective activity at those levels.


The 60 minute chart is quite overbought, so I'm actually a little bit bearish for the immediate future given this time frame. Late Friday, I decided to do a little house cleaning as I did not want to go into the weekend overly long. As a result, I closed out CAT, THOR and even ended my suffering in SQNM which just doesn't catch a bid. Perhaps I marked a bottom with that sale. I went as far as starting a trading short position in SPY. I'm still long WMT, TBT and LQD.


I have a target of 96 for LQD as I think fear will continue to drift out of the market. While the banks may be insolvent, they are making money borrowing for nothing, and lending at a much higher rate. This is basically a bet on narrowing spreads.


TBT is a similar trade to LQD. I suspect it will break out to the upside after this period of consolidation.


Over the next while, I am planning to build a short position in IYR. I've been patient in waiting for an uptick before shorting it... and what an uptick its been! At 30, I'll definitely want to layer it on. The 60 min chart is already rolling over, but I already have short exposure. I may just swap into this.


And GLD is rolling over. I'm actually neutral on gold for the short term (next few weeks) so I will play it both ways.


Good luck trading this week!