| Turnaround Tuesday |
 |
| Written by Jeff Hybiak | |||
| Tuesday, 12 July 2011 05:34 | |||
|
I've mentioned many times that Todd Harrison basically trained me on how to read the day to day fluctuations of the market via his trading diary at TheStreet.com. Now at Minyanville, Todd often would mention the phenomenon of "Turnaround Tuesday". For whatever reason, the market often turns from a very negative point sometime during the day on a Tuesday. Today may be another one of those famous turnarounds. The market was ugly yesterday, but the good news was there was not any technical damage done. The market stopped at the 50 day moving average & the long-term uptrend line dating back to last August. I zoomed the S&P chart out a bit today to highlight that the technical position the market is in now versus last summer's European led sell-off is much stronger. It is holding the 200 day moving average and volume is MUCH lower now than it was back then.
The market could still retest the 1295-1300 area (past resistance becomes future support), but so far the market is holding up nicely. The futures market was down over 1.5% in overnight trading on continuing fears that Italy is the next European shoe to drop. It is now appearing that traders pressed the short side into the close yesterday, accelerating the after hours losses. In the big picture the spread of the debt crisis to Italy is a very big deal. As we pointed out on June 29, the amount of Italian debt owned by European banks is larger than the combined holdings of Spanish, Greek, Portuguese, and Irish debt. When European leaders decided they would bailout Greece once again and not force lenders to take the losses on their bad loans, they made the choice to go down with the ship. When that finally matters is the big question. I mentioned to Shannon yesterday that if I were trading subjectively or in a buy and hold strategy I would just go to cash until all of this is over. Of course we cannot do that for many reasons. Instead we are "reluctant participants" in the market because of the strong technicals. We actually received some BUY signals yesterday as the light volume sell off took the market down to some key levels.
This reluctant bullish position can quickly be reversed. We are watching both the stock and bond markets closely for signs that the technical picture is turning as ugly as the fundamental picture. For now, we will be sitting pretty nicely if Turnaround Tuesday makes another appearance today because we have more exposure now for the rally than we did for the decline. Times like this are certainly not fun, but it is the very reason we do what we do at Strategic Equity.
The comments and posts published in the SEM Trader's Blog ARE NOT investment recommendations. They can NEVER be considered as trading calls or advices. If you decide to use the information offered here for your real trading it is at your own risk. Investing in the stock or bond markets involves risk and may not be suitable for all investors. Before making any investment decisions you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with your investments and seek advice from an independent financial advisor if you have any doubts. All investments involve risk including those managed by Strategic Equity Management. Opinions expressed at www.stratequity.com are those of the individual authors and do not necessarily represent the opinion of Strategic Equity Management or its management. Any opinions, news, research, analysis, prices or other information contained on this website, by Strategic Equity Management, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Strategic Equity Management will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The use of this website constitutes acceptance of our user agreement. Past performance is NOT indicative of future results.
|
